Friday, June 30, 2006

G'Buy to PayPal?

The Google empire have gone into the on-line payments business.

"Search giant Google has launched an online payments system which aims to compete with auction giant eBay. Dubbed Google Checkout, the system is designed to boost Google's main source of revenue - selling advertising. The service offers some free order processing to Google's millions of advertisers, but will initially be available only to stores in the US.
EBay unit Paypal is the market leader in online payments. EBay stock slipped ahead of Checkout's launch. "

Interestingly, the Beeb report downplays the idea that GBuy (as it is apparenly mostly already known) is intended to rival or destroy Paypal. Correspondents on Boing-Boing, NY Times and ZNet see it rather differently. "Google is charging merchants 20 cents plus 2 percent of the purchase price to process card transactions, less than most businesses pay for credit card processing. Banking industry executives say that credit card processors typically pay MasterCard and Visa a fee of 30 cents and 1.95 percent for every purchase, so Google will be subsidizing many transactions".

This could be good competition for PayPal - a good thing surely - and even the end of credit card domination of on-line payments - an interesting thing. Will Google, like PayPal, seek to be accredited in Europe as an Electronic Money Issuer, hence getting preferential treatment under the EMI Directive? It's only currently available in the US but one would think its case is even weaker than PP's (perhaps surprisingly successful) aplication - according to the Beeb again -

"The Google service will simply act as a transferring house, whereas Paypal has the facility for users to set up their own accounts to pay into - as well as offering credit card payments. "

To be an EMI requires stored value in essence - so it looks unlikely Google Checkout can qualify.

What does Google get out of it? More advertising is the main noted benefit; plus it supports their business opposition to Yahoo! and eBay/Paypal's recent tie up; but the NY Times also observes:

"Google may get several additional benefits from the checkout service. It will encourage more users to register and give it personal data, allowing Google to display advertising based on specific attributes of the viewer. More broadly, the data the company gets from transactions could help it improve the way it chooses which advertising to show to which users".

So we have interesting privacy implications too. Good thing Google does no evil, huh?

ps from John Battelle's SearchBlog, June 29 2006 -
The Oxford English Dictionary--last bastion of standardized English--includes "Google" as verb in the latest draft for its next edition. The pending definition, noted by Resource Shelf: intr. To use the Google search engine to find information on the Internet. trans. To search for information about (a person or thing) using the Google search engine.