Google just announced Google Checkout. At first glance it looks like a direct PayPal competitor. Fees seem close. PayPay charges 1.9% and $.30 per transaction. Google Checkout charges 2.0% and $.20 per transaction. There’s no sign up cost. They are close, that is unless you use AdWords to advertise your products.

Overture buster

Google is uniquely positioned to leverage its search popularity and combine it with a payment gateway solution.

It seems that Checkout is not just a PayPay competitor but a value added feature for AdWords subscribers. You get free payment processing at a ten to one rate for money spend on AdWords. For every dollar, euro, peso, whatever you spend on AdWords you get ten times that amount in free credit card processing for goods purchased through Google Checkout. Spend $500 per month in AdWords advertising and your first $5000 in sales won’t cost you any processing fees. A rule of thumb is to spend 10% of income on advertising. Google is making it attractive to spend that 10% on AdSense

That is something that no AdWords competitor can currently offer. Google goes even farther by placing a little shopping cart on the AdWords links that feature Google Checkout users.

Fewer forms to fill out

Using a buy through Google Checkout might allow you to bypass filling out forms with each merchant, too. Click the Google Checkout button and you go directly to Google’s processing center.

Once you’ve entered your shipping and credit card information once, you shouldn’t have to do so again. In theory this means between merchants, too. Though I imagine that many merchants will choose to place the purchase via Google Checkout at the bottom of an information collection form anyway.

As a consumer, I like the idea of not having to give my personal data out to everybody. As a merchant, I absolutely want contact information for my customers. Previous customers are the best targeted market there is for further marketing efforts. And research shows that existing customers don’t seem to mind an advert that says, “If you bought X, you might like to consider getting Y to compliment it.”

As with most payment gateways, the merchant does not handle your credit card information. That stays with Google. And Google keeps a record of your transactions across merchants, which you can view, like an online bank statement.

What I don’t see is any statement by Google the it won’t use your purchasing information for for it’s own marketing purposes. Google already admits that it scans Gmail for targeted advertising.

Google’s checkout Policies are laid out. Most, like not selling pornography, unauthorized goods or body parts seem obvious. Some like a proscription against selling magazine subscriptions are less so. I guess it’s a guilt by association matter. Too many people in that industry have been too sleazy for too long.

Seller’s features

Like PayPal, Google Checkout offers online wizards that make creating individual buy buttons easy to create, then paste into your pages.

Google even makes it possible to sell your products without having a website. Using Google Base, you can sell directly from Google search pages. If you don’t have a website, Google will create a free web page for your products

But integration with store software may take a while. PayPal has a long history and using it as processing gateway with shopping cart software is easy. It will take a while before Google Checkout’s API’s filter down to shopping developers, so don’t expect to integrate Google Checkout into your existing store right away.

Google has quite a bit of experience with catching fraud and Checkout proactively identifies and filters out fraudulent transactions, and under our Chargeback Resolution policy, Google evaluates all chargebacks you receive and, whenever possible, fights them on your behalf.

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This entry was posted on Thursday, June 29th, 2006 at 9:44 am and is filed under Web Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.