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Google Checkout: Will lose money to brutalize PayPal

Google has finally launched its own online payment service, and will stomach losing money on processing your credit cards -- in an aggressive move to go after competitor PayPal.

It is called Google Checkout, and our colleague Elise Ackerman has a good story in the Merc that talks about other benefits this will bring Google, including the ability to inspect user buying habits for the first time. That's one more step toward knocking away an advantage held by eBay in the marketplace.

Google will charge merchants two percent of each transaction, plus a 20-cent fee. That's less than PayPal's 2.9 percent standard rate, plus a 30-cent fee. And like PayPal, Google offers discounts to certain people. Google will waive fees on $10 of worth of purchases for every $1 a company spends on search advertising. Meanwhile, MasterCard and Visa typically charge 1.95 percent and a 30-cent fee, meaning Google will lose money while processing transactions for those cards.

However, we should note that Google doesn't have everything PayPal does. Checkout isn't a person-to-person, "stored-value" system like PayPal, which is why Google chief executive Schmidt can still contends Google Checkout isn't designed to be a competitor. Right!

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From: Money
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Tracked: July 29, 2006 11:58 PM


How is this not Evil?


Bruce Boston on June 29, 2006 7:42 AM
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The good part is that we no need to give our CC info to the all the merchants we buy from instead we can use Google Checkout. This way I feel that my credit Card info is secure at one location

Google Checkout on June 29, 2006 8:06 AM
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the best thing about all this is that PayPal will become better thanks to Google effect (they spend so much on innovation that everyone is forced to follow them).

Also, Yahoo and MSN will probably have no choice, but to implement similar payment integration into their own advertising systems. Yahoo already struck a partnership with PayPal (which in my view has been caused to large extend by their insider knowledge of what Google was planning to do). Thus Yahoo will should PayPal icon on the ads and it's also very likely MS will not try to develop payment system and decides take advantage of PayPal too.

So in my view it will be PayPal on Yahoo/MSN versus Google checkout on Google. I personally will switch back to Yahoo search from Google if Yahoo becomes a simple way to search for PayPal enabled merchants (I am a very heavy user of PayPal and Google check out offers absolutely nothing new or attractive to me).

PayPal might even benefit from Google checkout because Yahoo and MSN will probably have to absorb PayPal's 30c+1.9% of payment amount to give advertisers same incentives as Google gives - thus making PayPal free to merchants (if used together with pay-per-click) and thus making even more atractive for merchants to start accepting PayPal.

Steve on June 29, 2006 10:27 PM
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Doesn't Amazon provide the same thing its sells stuff for other retailers? Couldn't it make its payment mechanism a separate product and then upsell to its other services?

Al Brown on June 30, 2006 1:56 PM
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i think even if it is not person to person still it can damage paypal

umair on July 2, 2006 1:26 AM
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Try it!

ArT LeX on July 17, 2006 7:51 AM
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I checked out „Google-checkoutš.
The overall process seems to be very easy but exactly that makes this solution very vulnerable. During checkout there was no security question to make sure that I‚m indeed the owner of the Google account or the associated Credit Cards in that account. Of course I used my username and password but because there are so many Google sites, using the same username and password, it is very easy to loose your login information on a hijacking page as you might not check the url for Ad-Words or Gmail every time you log on as those services never had the possibility to shop with your Credit Card.
Now because you have one account and login information for all it is quite possible that hackers will try to get your login information from any Google service out there! Even worth is the fact that the hacker can change the password without any problem. The owner of the account might not even get any information about the password change as the e-mail is sent to the according and hijacked Gmail account.
Because of this HUGE security risk I would not recommend using Google checkout!
Please checkout the http://www.thebilliondollarpatent.com as s-registration solution that Google should have implemented in their service to make it solid and secure. This solution is requiring a third credential called TAN to make sure that ONLY the owner of that account is able to shop online even in case the account is hijacked.
I hope that everybody is aware of the security issue with Google checkout and will inform Google of a better solution!
Thanks and be safe;-)))!!

Erdbeere on July 23, 2006 9:44 PM
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