It's been almost one year since Google launched its very own payment service, known as Google Checkout. But prior to its arrival, consumers and merchants alike anticipated much more than just another payment service - they foresaw the unleashing of PayPal's biggest rival. Could the search engine giant really bury PayPal, the payment service many of us had come to associate with online transactions? One year later, congruencies and differences in the aims and results of the two services are clearer - as is the direction in which they're heading.
Google Checkout and PayPal certainly see some things eye to eye: both payment services provide a secure way to shop, with policies that refund a consumer's money in case of fraud. However, the two services cater to different needs. Google Checkout was designed to give businesses an easy way to charge for their wares, as well as to ease the hassles of keeping track of multiple online merchant accounts. Thus, above all else, Google Checkout serves as a holding place for credit or debit card information. It allows consumers to log in to a single Google username to shop, while hiding valuable data and e-mail addresses from merchants. And if you're selling something on a web site, you can cut and paste a code that lets visitors shop via Google Checkout - which, in turn, takes a small cut of your sales. The appeal of Google Checkout is its simplicity, along with having a single interface across multiple stores.
PayPal, on the other hand, offers a wider variety of services for shoppers and businesses to exchange money. For instance, only PayPal allows shoppers to transfer money to or from a bank account, in addition to using credit or debit cards. Moreover, shoppers can use the service to wire money to others, without requiring them to get a paid account. PayPal is also the only way to go if you're a worldwide shopper, allowing country-to-country transactions.
For the vendor, Google takes a smaller cut of payments than eBay's PayPal does. PayPal starts at US$0.30, in addition to 2.9 per cent of the total payment. Google, however, beats the rate with US$0.20 and 2 per cent, respectively. In addition, merchants who use AdWords get a break on these fees, at ten times the amount spent on advertising.
The Google Checkout shopping cart icon will likely pop up more frequently within text ads when you Google all sorts of subjects that can be bought or sold. However, PayPal's user base is 100 million strong, while Google Checkout is just beginning to take off. Moreover, as eBay owns PayPal, it means that only the PayPal service can be used to bid on or list auctions on eBay. Also, thousands of merchants are already PayPal-enabled, while Google is still building partnerships with sellers.
So, how will Google Checkout and PayPal hold up in the face-off? And is there likely to be a winner in the payments war? The future can hold anything; but for now, it seems that many merchants and consumers are yet to become familiarized or comfortable with Google Checkout - meaning that most simply still prefer to use PayPal for all their online transactions. Travel specialists in particular, are seemingly keen to stay - or get - under the wings of PayPal, as the service provides a long-tried and tested means of online transactions - an absolute must in a market as big as travel. Short break specialists Superbreak, for instance, recently started using PayPal, despite the availability of Google Checkout. And it was more than likely the long-held experience of the payment service that sealed the deal.
Andrew Regan is an online, freelance journalist who lists travelling and rugby among his interests.
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