Google Wallet May Compete With Paypal

theskeptic writes "According to the WSJ, Google plans to offer an electronic-payment service that could help the Internet-search company diversify its revenue and may heighten competition with eBay's PayPal unit. Codenamed Google Wallet, a payment service could represent a significant expansion beyond online advertising, which generated 99% of its $3.2 billion in revenue last year. Google's move could potentially threaten eBay's successful PayPal service, which generated $233.1 million, or 23% of eBay's revenue in the first quarter."

Comments

Competition is a good thing....

[erick99]

I had an eBayer complain about a transaction and PayPal did not just set aside the amount of the sale which was small - they locked out my entire account which had a ripple affect with other auctions I was running. By the time I was exonerated I had taken a beating. I am not opposed to competition if it might reduce some of this heavy handed behavior.

Ties to Froogle?

[Dark Paladin]

If Google's going this way, it might be just as easy to tie it into the Froogle service: let people find the item they want, then pay for it from the same interface.

In time, they could introduce their own eBay like system. Odds are, eBay won't just let Google Wallet into their system and people would have to do payments manually (they way they used to with Paypal). But if Google builds off of Froogle and inserts themselves as a middleman, it would be an effective way of getting extra revenue and balancing out their ad system.

Just a random thought - naturally, I could be wrong.

Re:Ties to Froogle?

[slavemowgli]

Abusing monopolies *is* not allowed, though. It's not that you can't be successful; it's just that if you are to a point where you are pretty much the only player left in the field, you're not allowed to use your market share to shut out others.

It's like Microsoft bundling IE with windows, for example - using an OS monopoly to create a browser monopoly. For a similar, less historic example, check what's behind the EU's requirement that M$ make a windows version without media player available. Contrary to what it might seem like, it's not just some bureaucrats running amok; rather, the fundamental idea is that by creating a more level playing field where no single player can bully everyone else, the customers will ultimately benefit. Which, incidentally, is the whole idea behind capitalism.

I really hope they go through with that

[slavemowgli]

I *really* hope they go through with that. So far, PayPal has what is pretty much a monopoly on online payments; there's alternatives like Moneybookers, but few people even know about them, and PayPal has consistently and systematically abused its monopoly by imposing more and more unreasonable restrictions.

Two that annoy me the most, personally are the fact that you can't use it for "adult" transactions, and that it's quite limited with regard to how you can get your own money that sits in your own account in many countries outside of the USA. In fact, there is a list of countries where the only available option is transferring the money to a US-based bank account - which really is ridiculous when you think about it. It may not matter much to the average US citizen, of course, but think about it - what would you say if you found out that the online payment service you used to have people pay for the stuff you sold on eBay only allows you to transfer the money to a bank account in - say - Uruguay?

PayPal's policies are consistent with those of eBay, though (its mother company nowadays); like eBay, PayPal is entirely inconsiderate of its users, a stark contrast to Google's "do no evil" philosophy.

Let's hope that Google will revolutionize online payments the same way they revolutionized searching, and let's also hope that PayPal will soon be just as forgotten as Hotbot, Northernlight, Mamma and all the search engines we used before Google was there.

And Google become regulated...

[G4from128k]

Getting into payment systems will expose Google to new levels of regulation that may affect user's privacy. Regulations related money laundering and anti-terrorist laws may force Google to collect and turn-over data on users of its payment service. I wonder if those rules might also force Google to turn-over other data on "customers of interest".

Having all your information (your banking, your email, your internet search activities) in one basket makes it a tempting target for government.

Adsense

[shird]

Id say one of the significant reasons for Google doing this is for payments to and from adsense publishers and adwords advertisers.

Currently they just send cheques in the post every month to publishers, which is crazy for overseas publishers and must increase their costs a fair bit. They don't use services such as Paypal due to the fees.

It would also help in obtaining money from advertisers for adwords.

Google deals with a lot of (sometimes small individual units of) money from publishers and advertisers, and their current system would be far better off if it were handled online through themselves.

natural progression

[enrico_suave]

Google basically made it's own micropayment transaction system internally to handle the accounting of google adwords and adsense revenue changing hands in millions of transactions every day.

They just needed to take the next logical step with it.

e.

Re:good, paypal needs competition

[JanneM]

I agree about the competition, but I would have hoped for a competitor that wasn't based in the same country. This means that both options are still subject to the whims of one country and its political and economic prticulars.

Re:Coming soon: GBay?

[The Clockwork Troll]

By that logic, Yahoo! Auctions would have killed eBay years ago.

Re:good, paypal needs competition

[Michael Spencer Jr.]

11 dollars seems pretty steep, but then again I've never used eBay or PayPal. Can you break that down for us? How much was payment-processing-related, and how much was listing-and-selling related?

I could understand maybe $1.50 or $2.00 for transferring $75.00. Pure interchange and assessments on a card-not-present Visa or Mastercard sale will cost most of that amount, and the processing company needs a little overhead to cover the small fraction of transactions the processor ends up paying for.

In general, payment processing has to have a cost, because there has to be oversight and oversight costs money. The only free way to transfer money is the buyer placing cash in the hand of the seller. Everything else has people in the loop somewhere. Some kinds of payment processing even have accountability -- fraud management, chargeback rights, stop-payment rights, etc. Those investigations cost money also, and that adds to the price of a transaction.