Google has rolled out the ability to send friends and family funds via Gmail on your Android phone. The update requires the latest version of Gmail (which rolled out last week) but the ability is a back-end change that Google has enabled. The ability to send funds is something that has been on the Gmail web portal for a while now and having it added to the Android version just makes it that much easier to use.
How it works is pretty straightforward. When you are composing an email to another Gmail user, tapping the attachment icon (the paperclip icon) will give you the option to send money. This will pop-up a page that allows you to type in the amount of money which can then be sent from your Google Wallet to the recipient. On their end, they simply accept the transfer in the email sent to them and they can have it added to their Google
Wallet or transferred to their bank account if they have it configured.
There are some catches to this as you may have figured out. First, it only works to other Gmail recipients. You can’t, for example, send mail to a friend on Exchange or Outlook.com. Second, this update is tied to your Google Wallet so you will need to fund that wallet in some way. This is usually just tying your Wallet to a credit card. Finally, this update is for Android only. iOS users don’t have this functionality yet.