Google (GOOGL) is making a big change to its mobile payment service, Google Wallet, Yahoo Finance has learned. Funds that are left in Google Wallet will now be FDIC-insured, which means Google users’ money is now a whole lot safer — and they probably never even knew it.

Here’s why this matters: when you stash your cash in mobile payment apps like Venmo, PayPal and Google Wallet, that money is not FDIC-insured. The Federal Deposit Insurance Corporation protects funds held by banking institutions up to $250,000. This is a good thing because, as history has proven time and again, banks can fail and when they do, the little guys need someone looking out for them.

These hot new money transfer services fall under the category of “non-banking institutions,” which includes the likes of payday lenders and prepaid debit cards. As a nonbank, they aren’t legally required to be federally insured.

These aren’t places consumers normally park their money, but rather tools to transfer funds from one person or entity to another. But that doesn’t mean customers don’t use them to stash their cash. For example, Google Wallet customers who send cash to or receive cash from other Google users can choose to keep those funds in what’s called their Wallet Balance.

As of now, Google Wallet’s user agreement says balances are not FDIC-insured. However, a Google spokesperson confirmed in a statement to Yahoo Finance that its current policy has changed. The company will hold Wallet balances in multiple banking institutions that are FDIC-insured, which means if anything were to happen to the company, users funds’ would be protected. The spokesperson did not provide any further details or say when the company would update its user agreement.



So, what about those other apps?

Neither Venmo nor PayPal — both eBay (EBAY) products — offers FDIC insurance for users who leave cash floating in their accounts. A spokesperson for both companies says they do not make public how they store unused user funds.



If you use one of these services simply to transfer money from point A to point B, which is their main purpose, you shouldn’t have to worry. So long as the cash you’re sending is tied to a bank or credit card account, your funds will be protected. (PayPal does offer zero liability protection for users, which means that they are covered for fraudulent account activity.)



For example, you might receive a $100 Venmo transfer from a friend who’s chipping in for her share of a group dinner. Rather than transfer that cash directly from Venmo to your bank account, you decide to leave it there. This isn’t unheard of, especially for heavy users of the app. You might like having a little cash stashed away in Venmo to have on hand for quick transfers. Just know that as long as that money is sitting in your Venmo account, your funds aren’t insured.

Ditto for PayPal. You may purchase something online and use your PayPal account to route the payment. If you return the item and the company refunds you, that cash will not go back into your bank account. It will go back to your PayPal account, which is not FDIC-insured. You may just forget to move the money to your bank account (a transfer that can take 2-3 business days) or decide you’d rather keep it there for the next time you shop online. It is not federally insured.



(Fun fact: This wasn’t always the case. For many years, PayPal stored consumers’ unused balances in various banks, all of which were FDIC-insured. It stopped this practice in 2012 after a California state law made it much more expensive for them to do so.)

PayPal spokesperson released this statement to Yahoo Finance:

People love to use PayPal because we offer best-in-class security and industry-leading consumer protections. PayPal provides our customers zero liability account protections if there are unauthorized payments and buyer protections if the item they purchase is not as described or does not arrive as promised. The safety and satisfaction of the people who use PayPal will always be our top priority. While it is true that PayPal balances are not FDIC-insured, it’s important to note that this insurance is intended to insure the savings in people’s bank accounts. Our customers do not use PayPal in this way. This is because it is not required to store a balance in a PayPal account to use PayPal and it’s free to withdraw any funds that may be in the account. For customers who do hold a balance in their account PayPal adheres to the same Regulation E consumer protection laws as banks.