Google has begun notifying some of its advertisers that, as of July 31, it will accept only bank-based payments.
Last week, Jeremy Brandt of We Buy Houses posted the text of the email he received from Google on X, formerly Twitter. The email read, in part: “Accepted forms of payment include check or wire transfer via the Monthly Invoicing billing method (recommended), or via Direct Debit for those choosing to remain on the Automatic Payments billing method (if available in your region).”
Google says the change in payment methods offers flexibility and control benefits for the affected high-growth accounts. However, Brandt said that the change will cost the company $250,000-plus a year and does not benefit the customer in any way.
Growing Pains
This change reflects a challenge many merchants face as their businesses grow. Startups seeking to attract customers want to make it easy for them to try their services. Card payments enable new customers to sign up easily, and the card authorization process ensures payment is guaranteed by the card issuer, allowing the service to be delivered immediately with no delays.
As businesses mature, the calculus changes.
“Payment card fees are expensive relative to ACH and other bank payment options, especially for a B2B product like Google Ads where payments can weigh heavily toward purchasing and rewards cards that carry higher acceptance fees for merchants,” said Don Apgar, Director of the Merchant Payments Practice at Javelin Strategy & Research.
“Google Ads is a well-established business, where many larger customers spend heavily and have built entire sales funnels,” he said. “As the larger customer relationships mature, the benefits of card payments diminish for Google, leaving only the higher costs. On a $10,000 monthly invoice, the cost for Google is 3% or $300 to process a card payment, versus 10 cents or so for an ACH.”
The Onus on Larger Customers
It’s important to note that Google is not discontinuing card acceptance altogether. Ginny Marvin, Google Ads Liaison, shared an update on X, indicating that the company informed a select group of advertisers about changes to their billing options. Newer and smaller customers will still have the option to pay with a card.
The burden for bank-based payments falls on the largest customers.
“If your business grows and you are ordering $10k every month in screws, they will push you to set up a billing account where they invoice you and you pay by ACH,” Apgar said. “For larger, established customer relationships where the value of Google is well-established, the customer’s ability to pay is known, and the monthly billing is high, it makes sense for Google to optimize payments costs.”