EcommerceBytes-NewsFlash, Number 1210 - February 06, 2006     1 of 4

eBay's PayPal Gearing up to Fight Google's GBuy Payment Service

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The Wall Street Journal reports today that eBay's online payment service PayPal is gearing up to compete with Google's long anticipated payment service. The Journal said Google has been testing "GBuy" for the past nine months. The financial newspaper quotes PayPal CEO Jeff Jordan, speaking about GBuy, "It's a very legitimate competitive threat."

Which may explain why eBay recently put into place a "Safe Payments Policy" limiting the payment services that sellers may advertise in their listings. eBay said at the time of the announcement that the policy was in response to safety concerns (http://www.auctionbytes.com/cab/abn/y05/m10/i17/s01).

PayPal is popular with eBay users as revealed by a survey of AuctionBytes readers conducted last month http://auctionbytes.com/cab/abu/y206/m02/abu0160/s02). PayPal was the number one form of payment accepted in online auctions, storefronts and retail websites by respondents, followed closely by postal money orders and money orders, which were followed by checks.

The reason for PayPal's success may be due to the fact that only 26 percent of respondents said they had a credit card merchant account, 74 percent said they did not. (PayPal allows individuals and businesses to accept credit cards without having to have a credit card merchant account.)

While eBay sellers cite PayPal as their number one form of payment, the survey revealed concerns with the payment service, including:

  • PayPal fees
  • Levels of customer service at PayPal
  • Concern over a lack of competition, with some mentions of Google as a possible alternative
  • Security and spoof emails
  • Dissatisfaction with PayPal's dispute resolution
  • PayPal accessibility issues
  • A need for a way to facilitate international payments

The online payment service area is a tough field in which to compete. Western Union (BidPay), Citibank (c2it), CheckFree and Yahoo (Yahoo PayDirect) all dropped their online-auction payment service offerings.

Related Links

"PayPal Prepares For a Challenge From Google," by Mylene Mangalindan, Wall Street Journal, February 6, 2006
(Paid subscription required.)
http://online.wsj.com/article/SB113918924045565647.html

AuctionBytes editorial about eBay's Safe Payments Policy
http://www.auctionbytes.com/cab/abn/y05/m10/i19/s00


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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