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Thursday, June 29, 2006
 Google Online Payment System May Challenge PayPal
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Message Text: Google launched a much-anticipated online payment system in the United States, in a move that could break PayPal's stranglehold on the market.

The US Internet juggernaut touted Google Checkout as a way to make online shopping "faster, more convenient and more secure."

"By integrating the checkout process with search and advertising, we're helping our users complete the cycle of searching, finding and buying," Salar Kamangar, Vice President of Product Management at Google, said in a release.

"Many shoppers decide what they want to buy by using search, but in the end they often don't complete the transaction online because they find the checkout experience complex, inconvenient and uncertain."

Checkout simplified online payment transactions for customers and merchants, according to Kamangar.

Shoppers can create password-protected Checkout accounts containing contact information, shipping address and payment preferences, and then use the accounts to shortcut the online buying process at participating websites.

Checkout logos will be placed on AdWords advertisements and on sites of participating merchants, the company said.

The payment system tracks what people buy and provides purchase history summaries that include details of orders and shipping status, according to Google.

Checkout offers security features that let people consummate deals without merchants learning their credit card numbers or e-mail addresses, the Mountain View, California, company said.

Google offered an incentive to AdWords advertisers, allowing all or portions of their sales free of charge.

The service was launched in the US market late Wednesday and Google was working to roll it out to merchants internationally, the company said.

Industry analysts contended that Checkout was a frontal assault on reigning online payment system PayPal, owned by Silicon Valley's eBay. Some had even dubbed Checkout a "PayPal killer."

"It could be quite a big deal if it is something that gets adopted by merchants and consumers," said Greg Sterling of Sterling Market Intelligence in the San Francisco Bay area.

Earlier this month, Google Chief Executive Officer Eric Schmidt contended that his company's payment system was "Not like PayPal at all" because it targeted advertisers instead of online shoppers.

Checkout and PayPal could co-exist as online payment options just as credit cards such as Visa and Mastercard are payment choices in traditional stores, according to Sterling.

"The question in my mind is whether consumers will use it in large nubers, and that is all about the trust factor," Sterling said. "The key is perception of security and privacy."

Google promised to stand behind transactions and "make someone whole" if there was fraud or problems with a sale, according to Sterling.

Checkout rewarded advertiser loyalty and promised to provide information enabling Google to better target ads. The system was also another way for Google to go beyond being an Internet search engine, Sterling said.

US Internet giants Yahoo and Microsoft have both offered online payment services that didn't catch on.
 
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