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EcommerceBytes-NewsFlash, Number 1312 - June 29, 2006 - ISSN 1539-5065    0 of 4

eBay's Fears Confirmed: Google Launches Checkout Service

By Ina Steiner
EcommerceBytes.com
June 29, 2006




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Google's long anticipated online-payment service, code-named GBuy, launched on Thursday under the official name, Google Checkout. For over a year, eBay management had monitored reports of GBuy, concerned about the impact it could have on its own PayPal payment service (http://digbig.com/4kqrx). While Google Checkout is not a "person-to-person, stored-value payments system," it will likely impact PayPal's business-to-consumer business to some extent, just as PayPal is making strides in expanding off-eBay.

Google Checkout is similar to Amazon Payments (http://digbig.com/4kqrt) in that shoppers can use one account to make purchases from participating merchants simply by logging in, without the need to enter a credit card each time a purchase is made. Google Checkout enables purchases using Visa, MasterCard, American Express and Discover.

However, while Amazon allows its payment service to be used by third-party sellers, it limits those transactions to Amazon properties (Amazon.com, Auctions, zShops, and Amazon Marketplace). Google Checkout can be used on Google properties, including for third-party Google Base transactions, but it also allows its checkout system to be used on merchants' own websites.

Shoppers can find stores that accept Google Checkout by looking for the Google Checkout icon (or "badge") on AdWords advertisements or whenever they come across the Google Checkout option on a merchant's site.

If shoppers want to use Google Checkout, they can create a Google Checkout login right from the merchant's site with a single username and password by entering basic information, such as their contact details, payment preferences, and shipping information, once. Then, when checking out at any store that offers Google Checkout, they can select Google Checkout and complete their transaction with their login information. Shoppers can keep track of their purchase history, including orders and shipping details, in one place.

Google Checkout conceals the buyer credit card number and provides reimbursement for unauthorized purchases. It also allows shoppers to keep email addresses confidential and turn off unwanted email from the stores where they shop.

Google offers financial incentives to merchants for accepting Google Checkout: processing fees are 2% and $0.20 per transaction. PayPal charges a standard rate of 2.9% plus $0.30 per transaction, or merchant rates ranging from 1.9% - 2.5% plus $0.30 per transaction (http://digbig.com/4hhmd). And merchants who use Google's search advertising program get a bonus: for every $1 they spend on AdWords, they can process $10 in sales for free.

Google Checkout integration options for merchant websites include cut-and-paste buy buttons and an API that integrates with existing merchant shopping carts and order management systems. Service providers that have integrated Google Checkout with their commerce platforms include GSI Commerce, MonsterCommerce and ChannelAdvisor. Checkout stores include Jockey, Starbucks Store, Levi's, Timberland and Buy.com.

Google Checkout is currently open to all U.S. merchants, whether they advertise with Google or not, and Google is currently working to make the service available to merchants internationally.

ChannelAdvisor, which launched as an auction-management service primarily for eBay sellers and is now a multi-channel management solution, issued a press release today announcing it supports Google Checkout. Once merchants have a Google Checkout account, ChannelAdvisor's support allows merchants to turn on Google Checkout with two steps: the merchant enters their Google Checkout information so that ChannelAdvisor can use the information to communicate with Google's Checkout APIs using encryption; and the merchant selects the online channels where they want to offer Google Checkout as an option.

While eBay may not like Google Checkout because of the competitive threat to PayPal, eBay needs to weigh the possible advantage it could gain in increasing the velocity of trading on its ecommerce marketplaces. A growing number of consumers are concerned about fraud on online auction sites, and some are skeptical of using PayPal. Seeing a seller is a Google-approved merchant with credit-card protections may allay some fears.

But perhaps just as disturbing to eBay may be the threat of Google Base, which Google promotes on its Google Checkout pages. Some of eBay's biggest draws for sellers are ease-of-use and traffic to listings, something Google Base has the potential of bringing to the table. And because Google Checkout is tied to the AdWords program, it could give more eBay sellers an incentive to expand beyond eBay and open their own websites.

eBay could try to ban its sellers from accepting Google Checkout. eBay's Safe Payments Policy allows it to dictate which payment services sellers can advertise in their eBay listings, and checkout systems designed by third-party vendors must comply with eBay policies (http://auctionbytes.com/cab/abn/y06/m06/i28/s01).

In Google's press release announcing Checkout, Salar Kamangar, Vice President of Product Management at Google, was quoted, "By integrating the checkout process with search and advertising, we're helping our users complete the cycle of searching, finding and buying."

http://checkout.google.com

https://checkout.google.com/sell

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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