UGN Security

Google launches Payment Processor

Posted By: Gremelin

Google launches Payment Processor - 07/11/06 07:33 PM

New: Google CheckoutAfter many rumors, Google has finally launched its long expected payment system. The payment system, called "Google Checkout", heavily builds on Google's brand recognition and Internet dominance. This could make it a serious competitor to PayPal, even if Google Checkout's features cannot yet compete with eBay's payment system.

How Does Google Checkout Work?

* Users provide Google with their credit card information, which is stored by Google.
* Users then can purchase goods and services at participating merchants without sharing their credit card information with the merchant. This is similar to how PayPal works, but in contrast to PayPal, users can't maintain an account balance with Google Checkout for future transactions.

What's In It For Buyers?

* Another payment option that allows buyers purchase good and services on the web without sharing credit card details with merchants - only Google knows the credit card details.
* Currently, Google Checkout is accepted at about 100 merchants. That's not many, but the program was only launched late last week.

What's In It For Sellers?

* Significantly cheaper transaction fees than those charged by PayPal. Google Checkout charges of US$0.20 and 2% per transaction.
* Discounts for merchants who are also Google AdWords advertisers - for every one dollar of AdWords spend, merchants can process $10 worth of sales for free with Google Checkout.
* A potential competitive advantage in regards to AdWords advertisers who don't offer the Google Checkout payment option. A little Google Checkout shopping cart icon will be displayed next to the URL of participating AdWords advertisers. If Google Checkout becomes popular, non-participating merchants could experience lower click-through and conversion rates, also impacting their AdWords position.
* Another payment alternative to credit cards, alleviating credit card security fears of shoppers.
* Google Checkout is currently only available in the United States.

What' In It For Google?

* Knowledge! Having users trustingly share credit card information with a company is certainly a sign of Google's reputation and trustworthiness.
* Even more commercially important, Google will be able to obtain behavioural data regarding merchants' e-commerce sites. Not only will Google get insight into merchants' revenues, Google will also be able to obtain conversion information and data on average order values, which the company could then use to increase AdWords costs for advertisers to the upper limits just acceptable for merchants.

One of the things that struck me was how much all of Google's product information was targeted at merchants, extolling the benefits from a merchant point of view. It is much less clear why users are supposed to flock to Google Checkout.

For smaller online retailers, Google Checkout could be a very attractive payment system - if they are willing to share quite sensitive business data with a third party like Google.

It will be interesting to see if the question of user benefits is going to be addressed by Google over the coming weeks, and it will be interesting to see whether fears about data sharing with Google outweigh potential benefits of Google Checkout from a merchants' point of view.

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