Google Steps More Boldly Into PayPal’s Territory

johnnymk · 12-20-2006, 02:03 AM

Keep it up, Google.....Buy.com deals and Google Checkout will bankrupt me.

http://www.nytimes.com/2006/12/20/te...th&oref=slogin

When Google introduced Checkout in June, it was seen as a formidable rival to PayPal, eBay’s online payment service. And with Google aggressively promoting Checkout during the holiday season and beyond, its use with some merchants has already surpassed PayPal’s.

But Google’s plan for Checkout has always been about more than online payments. The service is a calculated effort to expand Google’s base of advertisers, which provide the bulk of the company’s revenues.

And Google has made a substantial financial commitment to the service’s success. Goldman Sachs estimates that Checkout promotions will cost Google about $20 million in the current quarter.

The campaign to promote Checkout also says something else about Google: As rivals Yahoo and Microsoft are working on getting the basics right in their search and advertising systems, Google is racing ahead to consolidate its lead.

“I believe that Google’s advantage is widening with time and this is one example,” said Scott Devitt, an analyst with Stifel Nicolaus & Company. “Checkout could be a game changer, and the competitors are doing nothing of the sort.”

Unlike PayPal, a full-fledged payment system that can be used to transfer money between individuals and can draw funds directly from bank accounts, Checkout merely offers users an easy way to use their credit cards. Checkout users enter their credit card information, shipping and billing address into Google’s system. Then, they can pay with Checkout at participating stores without having to enter their personal information again and again.

Google says thousands of merchants are using the service. That is dwarfed by PayPal, which has millions of merchants and 123 million users around the world. In the most recent quarter, PayPal processed $9.1 billion in transactions, up 37 percent from a year earlier. While most of those were payments between eBay buyers and sellers, the number of PayPal transactions outside eBay rose 59 percent, to $3.3 billion.

Google has not released figures on the number of Checkout users. Still, there are signs that with the heavy promotions, the service is making significant inroads.

GSI Commerce, a company that runs about 60 online stores, including toysrus.com, levis.com and timberland.com, said that one in five holiday sales at its partners’ stores through the end of November were completed with payment systems other than credit cards, which include PayPal, a service called BillMeLater and Checkout. Of the three, “Google is the biggest by far,” said Michael Rubin, chief executive of GSI Commerce.

At StarbucksStore.com, Checkout transactions topped PayPal transactions by about a third, said Tracy Randall, president of Cooking.com, which operates StarbucksStore.com.

Checkout’s gains have not necessarily heralded a PayPal decline. A Goldman Sachs report this week said that based on conversations with various merchants, Checkout appeared to be making gains against traditional payment options and that PayPal’s share of online transactions was also growing.

Regardless, it is clear that the promotions have played an important role in Checkout’s quick adoption.

When Google introduced Checkout in June, it charged merchants 20 cents plus 2 percent of the purchase price for every transaction. (PayPal charges 1.9 percent to 2.9 percent plus 30 cents a transaction, while credit companies typically charge about 1.95 percent and 30 cents for every purchase.)

Yet, to lure merchants to its advertising system, Google offered them $10 worth of free transaction processing for every $1 in advertising they spent on Google.

But Google recently got more aggressive. On Nov. 8, it waived transaction fees for all merchants, regardless of whether or not they were Google advertisers, through the end of the year. Then, on Nov. 27, it began offering Checkout users $10 off $30 purchases at many e-commerce sites and, in some cases, $20 off $50 orders. And on Dec. 5, it announced that transaction processing would remain free to merchants through the end of 2007.

In other words, Google plans to lose money on every Checkout transaction for more than a year. Yet the company believes it will be worth it.

(see more on the link)

DarkFury · 12-20-2006, 07:27 AM

Heh...

"Google Checkout" dayuum near made me go broke this holiday season...

But at least I had a big fat smile on my face while doing it.

bachviet · 12-20-2006, 10:30 AM

I have been buying from Buy.com taking advantage of Google Checkout.

zippyjuan · 12-20-2006, 09:29 PM

I bought a couple of things I probably would not have (at least at this time) just because of the Google Checkout discount. On my order from Ritz I have received five emails telling me that my order had shipped- including three today. I hope I am not getting five of what I ordered!

yippiekiyeh · 12-21-2006, 08:49 AM

google checkout seems like a boon, back to the days of the great buy.com coupons and the like. I'll have to check it out sometime.

12-20-2006, 02:03 AM	#1
johnnymk Chief of Naval Operations Join Date: May 2000 Location: LEVITTOWN< PA> USA Posts: 13,621	Google Steps More Boldly Into PayPal’s Territory Keep it up, Google.....Buy.com deals and Google Checkout will bankrupt me. http://www.nytimes.com/2006/12/20/te...th&oref=slogin When Google introduced Checkout in June, it was seen as a formidable rival to PayPal, eBay’s online payment service. And with Google aggressively promoting Checkout during the holiday season and beyond, its use with some merchants has already surpassed PayPal’s. But Google’s plan for Checkout has always been about more than online payments. The service is a calculated effort to expand Google’s base of advertisers, which provide the bulk of the company’s revenues. And Google has made a substantial financial commitment to the service’s success. Goldman Sachs estimates that Checkout promotions will cost Google about $20 million in the current quarter. The campaign to promote Checkout also says something else about Google: As rivals Yahoo and Microsoft are working on getting the basics right in their search and advertising systems, Google is racing ahead to consolidate its lead. “I believe that Google’s advantage is widening with time and this is one example,” said Scott Devitt, an analyst with Stifel Nicolaus & Company. “Checkout could be a game changer, and the competitors are doing nothing of the sort.” Unlike PayPal, a full-fledged payment system that can be used to transfer money between individuals and can draw funds directly from bank accounts, Checkout merely offers users an easy way to use their credit cards. Checkout users enter their credit card information, shipping and billing address into Google’s system. Then, they can pay with Checkout at participating stores without having to enter their personal information again and again. Google says thousands of merchants are using the service. That is dwarfed by PayPal, which has millions of merchants and 123 million users around the world. In the most recent quarter, PayPal processed $9.1 billion in transactions, up 37 percent from a year earlier. While most of those were payments between eBay buyers and sellers, the number of PayPal transactions outside eBay rose 59 percent, to $3.3 billion. Google has not released figures on the number of Checkout users. Still, there are signs that with the heavy promotions, the service is making significant inroads. GSI Commerce, a company that runs about 60 online stores, including toysrus.com, levis.com and timberland.com, said that one in five holiday sales at its partners’ stores through the end of November were completed with payment systems other than credit cards, which include PayPal, a service called BillMeLater and Checkout. Of the three, “Google is the biggest by far,” said Michael Rubin, chief executive of GSI Commerce. At StarbucksStore.com, Checkout transactions topped PayPal transactions by about a third, said Tracy Randall, president of Cooking.com, which operates StarbucksStore.com. Checkout’s gains have not necessarily heralded a PayPal decline. A Goldman Sachs report this week said that based on conversations with various merchants, Checkout appeared to be making gains against traditional payment options and that PayPal’s share of online transactions was also growing. Regardless, it is clear that the promotions have played an important role in Checkout’s quick adoption. When Google introduced Checkout in June, it charged merchants 20 cents plus 2 percent of the purchase price for every transaction. (PayPal charges 1.9 percent to 2.9 percent plus 30 cents a transaction, while credit companies typically charge about 1.95 percent and 30 cents for every purchase.) Yet, to lure merchants to its advertising system, Google offered them $10 worth of free transaction processing for every $1 in advertising they spent on Google. But Google recently got more aggressive. On Nov. 8, it waived transaction fees for all merchants, regardless of whether or not they were Google advertisers, through the end of the year. Then, on Nov. 27, it began offering Checkout users $10 off $30 purchases at many e-commerce sites and, in some cases, $20 off $50 orders. And on Dec. 5, it announced that transaction processing would remain free to merchants through the end of 2007. In other words, Google plans to lose money on every Checkout transaction for more than a year. Yet the company believes it will be worth it. (see more on the link)

12-20-2006, 07:27 AM	#2
DarkFury Secretary of the Navy Join Date: Feb 2001 Location: Chillin' N Da 'Hood Posts: 34,997	Heh... "Google Checkout" dayuum near made me go broke this holiday season... But at least I had a big fat smile on my face while doing it. __________________ DarkFury's Pimptopia - Don't Hate the Playa, Hate the Game! Home of the Original OG Pimp (accept NO imitations)

12-20-2006, 10:30 AM	#3
bachviet What's Da Pho*? Join Date: Aug 2001 Location: SoCal (714) Posts: 13,296	I have been buying from Buy.com taking advantage of Google Checkout. __________________ Dell Dimension 9200 \| Intel Core 2 Quad Q6600 (2.4GHz) \| 4x1GB DDR2 \| 256MB nVidia GeForce 8800GT Dell Studio 17 \| Intel Core i7-720QM (1.6GHz) \| 2x2GB DDR3 1066MHz \| 1GHz ATI Mobility Radeon HD 4650 Intel P4-C 3.0GHz \| ECS 865PE-A \| 3x512MB PC3200 \| 128MB PNY GeForce 6600GT

12-20-2006, 09:29 PM	#4
zippyjuan Picture of the Day Guru Join Date: Oct 2002 Location: Sunny San Diego Posts: 8,756	I bought a couple of things I probably would not have (at least at this time) just because of the Google Checkout discount. On my order from Ritz I have received five emails telling me that my order had shipped- including three today. I hope I am not getting five of what I ordered! __________________ I add new pictures to my photo gallery pretty regularly. You can see them here if you are interested: http://www.pbase.com/jeffryz

12-21-2006, 08:49 AM	#5
yippiekiyeh A Friend of a Friend Join Date: May 2001 Location: WESTSIDE! Posts: 1,673	google checkout seems like a boon, back to the days of the great buy.com coupons and the like. I'll have to check it out sometime. __________________ Distributed.Net I'm Trying this blogger thang...

Thread Tools	Search this Thread
Show Printable Version Email this Page	Search this Thread: Advanced Search
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

User Name
Password
Remember Me?