Google is reaching into your pockets.  Not literally of course, but with its newly announced  Google Wallet Gmail integration, that’s what it feels like.

At Google I/O 2013, the search giant announced three things that are happening to Google Wallet.  The first is Gmail integration that lets users send money to other people, even those not using Gmail but who have a Google Wallet account, as easy as attaching a file on an e-mail.  With a click on the “$” sign button on Gmail, you can send money to other people.  If you’re using your Google Wallet Balance or paying directly from your bank account, sending money is free, but if you’re sending money via your linked credit or debit card, the transaction comes with a fee, about 2.9 percent per transaction (minimum $0.30).  Receiving money however, is always free.

Right now, sending money via Gmail is only a desktop feature, but on your mobile device, you can visit wallet.google.com to send money from Google Wallet.  The Google Wallet integration to Gmail will rollout over the next few months in the US.  The service will be available to anyone in the US 18 years old or over.  You can get this feature early if you have a friend who already has it and sends you come cash via Gmail.

Elsewhere, Google made some Wallet announcements directed at developers.  Google is inviting developers to sign up for the Google Wallet Instant Buy Android API, which makes buying in native Android apps fast and easy.  It provides developers with fast checkout for Android users buying physical goods, easy app registration for logged in users, more secure payments, and easy integration with no Google fees.

And finally, there’s the Google Wallet Objects API, which lets developers/merchants integrate their loyalty programs, offers and more into Google Wallet so it will always be ready and easy to use. In addition, Google’s services will be properly integrated to Wallet, so if a consumer passes by a certain establishment that he or she has a coupon or special offer for, they will instantly be alerted so that usage of coupons can be maximized.  Google hopes that this feature will drive deeper consumer-brand engagement.

It should be noted that Google is not shying away from its NFC roots, it’s just expanding as NFC is not something available everywhere:

“We are not pulling away from NFC,” Peter Hazlehurst, director of product management for Google Wallet said in an interview. “We are simply making a much richer Wallet experience. There are still places where NFC can’t be used. And not every device has it yet.”

So what does this mean for consumers?  Simple, a better way for buying digital or actual goods online.  Currently, the most widely used form of online payment is credit cards or payments processing services such as PayPal.  The problem is that many people have grown tired of PayPal’s excessive fees and poor currency conversion rates, and are looking for other alternatives.  Could Google Wallet be the answer to people’s money transferring problems?

Three Ways Google Wallet Beats The Crap Out Of PayPal

Receiving money is always free

That’s what Google claims, and it’s doubtful that the search giant would change that, especially if they want more people to use the service.  This is one of the biggest drawbacks with using PayPal – users are charged for receiving their money.

Merchants aren’t charged

Unlike PayPal, which charges 3.9 percent to sellers, Google doesn’t charge a penny. According to Google Wallet’s FAQ page, it “does not charge a fee to accept Google Wallet payments in-store. Merchants will need to pay their usual card processing fees.”

You can use it online or in physical stores

PayPal is for online transactions such as for paying for online goods and money transfers. With Google Wallet’s new features, it’s all that and so much more, since you can use it to pay for goods in physical stores provided that the merchants accept Google Wallet payments.

Unfortunately, PayPal has a much broader reach than Google Wallet, and GW’s new features will only be available in the US.  If Google wants to dethrone PayPal, it needs to expand to more countries and make its new features available to the rest of the world.