Posted December 20, 2006 10:47 am by with 7 comments

Tweet about this on TwitterShare on LinkedInShare on Google+Share on FacebookBuffer this page

The NYT takes a look at Google efforts to take market share away from eBay’s PayPal. The two are in a battle for the right to process credit card payments of companies looking for an alternative to merchant accounts.

What’s interesting is that PayPal doesn’t appear to be concerned with Google’s onslaught. Despite Google offering free payment processing until the end of 2007 and consumer incentives such as $20 off a $50 purchase, PayPal isn’t responding. Why? Well for one thing, it doesn’t need to…

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.

At first glance, it appears Google’s incentives are part of a plan to simply offer a competitive product to PayPal’s, but Google could also be working to ensure Google Checkout becomes a pay-per-action alternative.

…Checkout gives Google detailed knowledge of its users’ buying habits, which the company could use to customize the delivery of ads or search results to specific users…the system could make it easier for Google to develop a new advertising model in which advertisers pay only when a user completes a transaction, rather than every time a user clicks on an ad.

Pay-per-action is something that we’ve been expecting from Google for years. It will be interesting to see if it becomes a reality.

Mr. Ling said Google had no plans to tie search results to buying habits or to use Checkout to move to a cost-per-action ad model. But he added: “If there is a service that is of value to consumers, we will consider it.”

That’s definite “yes” then. 🙂

  • Hi Andy,

    I don’t think I agree that PayPal is not threatened by Google Checkout. If you recall, back in July eBay had banned its customers from using Google Checkout.

    Right now, a lot of merchants are still hesitant in using Google Checkout because of its “liberal” chargeback policies and the fact that it conceals too much customer information. However, Google is gaining ground with consumers by offering discounts on anything they buy. Soon consumers will expect merchants to have Google Checkout as one of their options because of the value it provides.

    If you add on top of that the whole thing with the shopping cart icons in the sponsor listings and free credit card processing, merchants are running out of good reasons not to use Google Checkout.

    Whatever Google’s plans are for the moment, I think Google is flexible enough to take advantage of the new direction in which this service might be going. With that being said, PayPal has to think fast or lose their hold on the market.


  • I agree Andrey. I think 2007 is going to be a big year for Checkout and PayPal needs to come up with something quick.

  • The tipping point for google checkout becoming a success is when I star getting phishing emails anywhere near the level I get for paypal 😉

  • LMAO!

  • Google checkout currently only operates for US vendors. Paypal is global. That’s the difference.


  • Good point Andrew. I’m sure Google is fine tuning the service with US vendors, before opening it up to the rest of the world.

  • Still everyone uses Paypal.