Google new service to rival Ebay’s PayPal

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Google will take a major step beyond search on Thursday, launching an online payment service that will undercut the charges of established providers such as Ebay’s PayPal in enabling transactions over the web.

The internet company is introducing Google Checkout, which it says will speed the purchase process for consumers and make it easier for advertisers to monitor and complete sales.

Eric Schmidt, Google chief executive, had earlier insisted that the payment system would not compete directly with Paypal, but the final version has ended up targeting the same market.

“Since we needed to build a great checkout experience for Google products [such as Google Earth, Google Video and Web Albums], we thought why not think bigger and let other merchants leverage this checkout process as well,” said Salar Kamangar, vice-president of product management, in a Financial Times interview.

A small shopping trolley icon next to Google ads will signal that anyone clicking on them can buy a product or service using Checkout, which will store users’ details securely, including chosen credit card numbers and billing addresses. Users will also be able to go to a page summarising their orders across a range of merchants and enabling them to track packages.

Google said it had been working with retailers such as Starbucks, Jockey, Levis, Timberland and Buy.com in testing the service.

To help it gain traction, Google is offering discounts to merchants and charges of only 2 per cent on purchases and 20 cents a transaction.

“We think it’s very competitive, you will typically pay in the range of 2 to 3 per cent and 30 cents per transaction with other providers,” said Mr Kamangar.

The scheme has had a longer gestation period than most Google products and is not being launched like the usual unfinished “beta” products, but as a final version. News of it first surfaced in April last year when Google filed to incorporate Google Payments Corp. The length of time signals Google’s lack of experience in financial services and the need to build out an infrastructure and fraud prevention mechanisms.

Online transactions are still dominated by credit and debit card companies, but the PayPal service has won around 10 per cent of the market. In its last quarter, eBay reported that PayPal earned $330m from processing $8.8bn in payments, up from $227m and $6.2bn a year earlier.

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