EcommerceBytes-NewsFlash, Number 1225 - February 27, 2006     2 of 5

eBay, PayPal Face Increasing Competition from Google

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The official Google blog announced on Friday that Google will add functionality to its online billing and payments service that will allow users to pay for online purchases (http://googleblog.blogspot.com/2006/02/update-on-payments_24.html).

Last June, the Wall Street Journal had reported that the search engine was planning a payment service that could pit it head-to-head with eBay's PayPal service, and it was the talk of the eBay Live conference held a few days later. But Google has been reticent to talk about the service.

Friday's Google Blog announcement stated, "If you take a look at the history of Google's advertising programs and online services, one thing you notice is that online billing and payments have been a core part of our offerings for some time." The announcement emphasized Google's experience in processing payments internationally (in 65 countries and in 48 currencies).

The key to Google's payment service is a user's Google Account (https://www.google.com/accounts/ManageAccount). Google Account gives users access to various Google services, including Google Groups, Froogle Shopping List, Personalized Search, Personalized Homepage and Google Answers.

On Friday, the blog devoted to Google Base also posted an announcement about the Google payment service (http://googlebase.blogspot.com/2006/02/buying-on-google-base.html). Last November, Google introduced Google Base, a service that enables content owners to make their information searchable online, including classified ad listings, causing some to believe it could become a competitive threat against eBay's marketplace (http://auctionbytes.com/cab/abn/y05/m11/i16/s01).

Friday's Google Base blog announcement stated that, "For buyers, this feature will provide a convenient and secure way to purchase Google Base items by credit card. For sellers, this feature integrates transaction processing with Google Base item management."

One of PayPal's advantages is that online sellers can accept credit card payments without having a credit-card merchant account. It appears from Friday's announcements that Google is offering the same convenience. Another advantage to PayPal is that sellers can use their funds to make online purchases. It's possible Google will allow publishers that generate funds through its Google AdSense program to use those funds to make purchases as well.

An area of concern for both eBay and PayPal is online fraud. Whether Google will have an advantage or disadvantage in preventing and dealing with fraud perpetrated through its services remains to be seen.

Independent bloggers have been discussing the announcement, including Venture Capitalist Bill Burnham (http://billburnham.blogs.com/burnhamsbeat/2006/02/uh_oh_ebay_goog.html). ChannelAdvisor CEO Scot Wingo also explores the Google payment service (http://ebaystrategies.blogs.com/ebay_strategies/2006/02/google_base_buy.html) and (http://ebaystrategies.blogs.com/ebay_strategies/2006/02/google_base_now.html).

Of concern to sellers on eBay is the auction site's new "Safe Payments" policy it rolled out last fall (http://auctionbytes.com/cab/abn/y05/m10/i19/s00). The new policy bans sellers from mentioning online payment services in their listings unless specifically allowed by the auction site. eBay has begun enforcing the policy and has already pulled sellers' listings that violate the policy. The policy states that eBay will evaluate new payment services as they arise "to determine whether they may present trust and safety concerns and are appropriate for the marketplace."

Unless eBay specifically states in its policy that it accepts Google's payment service, sellers will be violating the eBay policy if they include any mention of it (http://pages.ebay.com/help/policies/safe-payments-policy.html). A discussion started on the AuctionBytes forums last month polled users, "Will eBay block GBuy as a safe payment method?" (http://www.auctionbytes.com/forum/phpBB/viewtopic.php?t=18124).


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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