PayPal vs Google (Buy)

pc-facile.com writes "While Google Chief Executive Eric Schmidt confirmed in press accounts that the company was building a payment service, Mr. Schmidt also denied it would directly compete with PayPal. Mr. Schmidt said Google didn't intend to offer a "person-to-person, stored-value payments system," which many people consider a description of PayPal's service. Mr. Jordan (PayPal chief) says he and his team immediately "dissected the wording" of Google's statements. He says he doesn't believe Mr. Schmidt..." There's also a more in depth WSJ article about the service.

Comments

Why Bite the Hand that Feeds?

[mfh]

How can Google create an online payment system without competing with PayPal? Google doesn't want to piss off eBay, because eBay is one of Google's largest advertisers -- so I completely understand why Google would say that they won't compete directly against PayPal -- I get it. Never bite the hand that feeds. (great NiN tune!)

But what I don't understand is the resulting system... what could it possibly consist of if it can't compete against PayPal? Perhaps they will use PayPal's services within the scope of the new system and defer customers to PayPal for the actual transactions? Partnerships happen when companies fear retaliation or when companies see greater profits by working together, and I think it's possible that is what's going on, in this case. Either that or we'll be seeing a very crippled new system from Google.

Re:Why Bite the Hand that Feeds?

[stinerman]

Google mighn't want to piss of eBay, but someone has to provide an alternative to PayPal sooner or later, and it might as well be them. I can recall quite a few times that sellers lost a sale to me because they only accepted PayPal. If there was a viable alternative with a sane TOS, perhaps I'd use it. Until then, I'm stuck ordering from merchants who take credit/debit card orders.

Re:Why Bite the Hand that Feeds?

[HugePedlar]

I got quite excited about the concept of micropayments a few years back. If I could sell stuff (software, music, videos, etc.) for £0.10 per download I might get rich. Maybe not, but the idea is cool.

Unfortunately, even if Paypal weren't the evil beast people proclaim it to be, it has still stifled the online payment market through its outragous fees for transactions. Payments of less than £1.00 are worthless.

If Google can provide a viable model for micropayments it could take over a different sector of the market by catering to the smaller purchasers.

Of course, I'd be just as happy if Google pounded Paypal into the dirt.

Re:Why Bite the Hand that Feeds?

[duffbeer703]

I could see Google doing something like a credit union, where people loan out money to other members. Or even something simple like a billpay service.

Google's MO is exploiting content & social relationships to sell ads. A Google money service would use the same techniques to maximize loan returns or to target ads.

Think about it, as an advertiser, I could potentially use Google to target results to people with $x in their checking accounts.

Re:Why Bite the Hand that Feeds?

[NoMoreNicksLeft]

I remember when paypal was "we'll make our money off the float, totally free for you!". That lasted what, 8 months? Now they fee you to death, police what you can buy and sell, and penalize you whenever they feel like it with absolutely no recourse. I'm trying to set up my own paysite soon, but I can't really use them, and I can't afford a proper merchant account.

I hope google kicks their ass. Hell, I hope google sets up its own auction site.

Re:Why Bite the Hand that Feeds?

[thrillseeker]

One thing Paypal does not do well is micropayments, or payments under $1, but it's something Google does very well. Consider the millions of virtual pennies they daily count for AdSense. (or is it AdCents?!)

Exactly. Paypal could eliminate much of the incentive to produce an alternative by simply eliminating the $0.35 charge. The 2.9% is (barely) bearable, but the fixed-price charge eliminates the entire world of micropayments.

Additionally, when they started charging percentages for both personal accounts, a requirement to deal in any significant amount of money, they made a lot of people's shit lists. Paypal needs to get aggressive about being viewed as cost-effective at all price levels - their relatively high percentage rate and fixed minimal fee causes them to only be attractive to a general audience (which is most of the potential world) for a narrow price range. If a company can't make a profit by skimming a single penny from every online transaction then the problem is internal to the company.

Re:Why Bite the Hand that Feeds?

[TClevenger]

Would you pay 1c every time you opened Google's continuall-improved word processor?

No. I'm happy with OpenOffice, and despite what Microsoft tries to tell us every other year, word processors have not improved substantially since Office 97, and are certainly not worth the $200 or whatever the hell MS is charging nowadays.

But for services that require work to keep current, such as Google Maps, or hosted apps without a good open-source alternative, I would be happy to pay.

Re:Why Bite the Hand that Feeds?

[Rude Turnip]

"If there was a viable alternative with a sane TOS, perhaps I'd use it. Until then, I'm stuck ordering from merchants who take credit/debit card orders."

On a similar rant, I generally won't do business with anyone on eBay who doesn't explicitly say that they will accept US Postal Money Orders. Personally, I prefer to use Paypal, but accepting USPS money orders is the gold standard for any merchant in my book. Why? In my book, anyone that won't accept such money orders is a potential fraudster, afraid of the law. If anyone screws around with a transaction that involves a USPS MO, it turns into a mail fraud case.

Re:Why Bite the Hand that Feeds?

[xtracto]

One thing Paypal does not do well is micropayments, or payments under $1, but it's something Google does very well. Consider the millions of virtual pennies they daily count for AdSense. (or is it AdCents?!)

The virtual wallet metaphor has been tried many times with no success, but Google has the clout and expertise to do it.

Oooooh!, so that is why the actual music shops charge $1 for each song now uh? I hope Google hurry up with its micropayment thing, I am *sure* Music companies will be really glad to cut their prices to a fair price! /me runs and hides

Re:Why Bite the Hand that Feeds?

[JourneyExpertApe]

You can accept debit/credit cards with paypal. You have to sign up for the service, and there's a fee (I think about 3% of each transaction and a currency conversion fee). The problem is that once you sign up they also charge you a fee for person-to-person payments that were previously free. The benefit of using paypal for credit card payments is that you have to agree to the amount that is charged before the transaction goes through. That's the way it should be with all credit card transactions rather than having to rely on the integrity of the seller.

Yes, please.

[jfisherwa]

PayPal is top on my list of evil Internet companies. Maybe it's top on Google's as well.

Re:Yes, please.

[putko]

What is so evil about PayPal?

I've mostly been struck at how irritating their website is to use. I went through most of the hassle of registering an account, but never finished, because it was just too irritating and long. Way to much reading and clicking.

Disabling my account when I moved countries was also a huge pain in the ass. In the end I figured it was easier to just never do business with them.

In the end I decided that I didn't trust their competency enough to give them my card info. I trust Amazon, and Yahoo! Store, but that's about it.

Re:Yes, please.

[Anonymous Coward]

See http://www.paypalsucks.com/. There's plenty of evidence (news articles etc.) to suggest it isn't just a smear site done by competitors.

Re:Yes, please.

[ionpro]

Google doesn't do anything of the sort. Google.com is provided completely uncensored to Chinese audiences. However, the government disables cached pages, translation, and a few other services. It's also very slow, because it has to go through the firewall. All Google did was provide a point-of-presence inside China for google.cn. They would be shut down for this point of presence if they didn't at least pay lip service to Chinese Internet law. As the silly ways to break the Google filter show (searching in UPPERCASE, adding a period, ...) it's obvious Google is doing as little as possible to ensure the government doesn't shut them down. But people are protesting their so-called human rights violations. It's rediculous, and the only reason people do it is because Google has become big enough that it's cool to bash them.

Google philosophy is that they can make more money, long-term, by doing no evil. I've yet to see anything from them that shows they've abandoned that philosophy.

Can third party transfer survive?

[dada21]

As the banking cartel finds new ways of transfering money "instantly" I wonder if Paypal (and Google Buy) will be able to last without actually becoming licensed and regulated banks themselves. The banking industry has the most collusion (and conspiracy theories) of any industry you'll ever research, and I don't see them just giving up the control of the currency base. Paypal appeared out of the blue (in a bank's reference time) with their services, and it wouldn't surprise me if the banking cartel creates a new standard for money transfers that puts up huge roadblocks for Paypal in the name of "fighting terrorism and money laundering."

I don't like paper cash, and I definitely don't like digital cash. The banking cartel, on the other hand, worked very hard to separate paper receipts for gold from the actual gold, and then the paper receipts became valuable. Now they've made almost 80% of currency digital already (compare M1 versus M3 money supply figures), and I'm even more hesitant to become part of that system. Paypal has embraced it entirely, but I wonder how quickly they'll be forced out of the business if they don't become part of the system.

In the end, competition is destroyed, and we the consumer will end up with pretty much what we've always had.

Re:Can third party transfer survive?

[dada21]

Rothbard in his (free e-) book What Has Government Done to our Money? proves that paper money was a conspiracy for control, definitely.

Money is VERY easy to understand -- it is merely a store of time. You perform some work for someone, instead of bartering for their services or products, they can give you some of their time that they have earned in the form of something valuable, divisible and easy to recognize. This has historically been gold or silver (or wheat or oxen or dirt). Gold and silver have been the best forms of money as they are near impossible to counterfeit or duplicate.

As society evolved, people wanted to be secure with their savings, so they stored it into banks of security. These banks issued receipts for the gold or silver. Banking was private, they all had their own "dollar" bills that were private -- banks competed by offering good rates for secure savings or they helped you invest your gold/silver by loaning it to others.

You could always redeem your receipts (or the receipts of others) for the physical gold/silver if you wanted. This all changed in around 1913 (and a few times before in US history) when the government said gold wasn't valuable and that paper receipts were. Of course, central banks up until the early 1970's still balanced their accounts with gold, and central banks still store gold in reserves. Crazy how the general public loves paper, but governments and central banks loves gold.

Re:Can third party transfer survive?

[Anonymous Coward]

+5 Interesting for this? The parent seems not to have much of an understanding of the monetary system, and is implying that the supply of money (including digital money, which is no more virtual than paper money is) is not regulated? Gold is no more inherently useful to humans than paper money is. The value of any currency lies soley in the trust that the people who trade in it have that everybody else trusts it too. That's as true today as it was when we traded in gold, salt, or seashells. If the federal bank supplies too much money, we get inflation, if they supply too little, we get deflation. The dollar is traded on the international market, and it's in our interest to keep the right supply balance to maintain that trust. Please explain, dada21, where lies the conspiracy?

Re:Can third party transfer survive?

[dada21]

Please explain, dada21, where lies the conspiracy?

If you go to my website I list the M3 money supply figure as reported by the Fed. This figure shows the true inflation of the dollar and is reflected in many consumer goods price increases since 1913. Yet in recent times, I do believe that the central banks have been hiding inflation by manipulating their gold reserves through leases, swaps and call options. Instead of feeling the true hit of 20% inflation, we're seeing gentle 3-5% inflation because the price of gold has been kept low through the various manipulations. The Cheuvreux report (PDF warning) came out the other day, and it is the first international brokerage company to actually validate what I've been saying for 4 years.

If you're familiar with my Rothbard link and the Cheuvreaux Report, you'll be really worried for the near and long term future of this country. The dollar's manipulations are finally coming to the surface, and much of our empire's growth in the past 50 years can be tied to holding on to hiding the manipulations. I hate the tinfoil hat side of my beliefs, though, but it is so hard to find where I've been wrong -- every day I read more and more confirmations of what was once considered "crazy."

Re:Can third party transfer survive?

[Anonymous Coward]

The dollar is traded on the international market, and it's in our interest to keep the right supply balance to maintain that trust. Please explain, dada21, where lies the conspiracy?

Dada21 is fairly well known in these parts for using real gold as trade. His posts clearly indicate how he doesn't trust the Fed to regulate themselves and shows how they keep printing more and more paper dollars (think Vietnam war era), and continuously raising the debt ceiling for the deficit. We're quickly headed toward hyperinflation.

Gold is a real and valuable asset. It is an incredibly stable metal used in industry and jewelry. It has value in and of itself, so it also makes a good money source. Green paper doesn't have hardly any inherent value in itself, basically just a big "Trust Us" from the feds. Electronic bits on a computer have even less value. With the Euro, we now have a serious competitor for universal currency and nothing to actually back our own.

been predicted for a while now...

[Anonymous Coward]

http://slashdot.org/comments.pl?sid=146731&thresho ld=1&commentsort=0&tid=217&mode=thread&cid=1229147 1

Yet another online credit card service?

[xxxJonBoyxxx]

"For the last nine months, Google has recruited online retailers to test GBuy, according to one person briefed on the service. GBuy will feature an icon posted alongside the paid-search ads of merchants, which Google hopes will tempt consumers to click on the ads, says this person. GBuy will also let consumers store their credit-card information on Google."

I think Google may have a point. If this is simply yet another small-volume, web-based credit card processing thing, then the quasi-online bank features of eBay still make it a unique service.

I wonder how long until Google's credit card database gets hacked the first time...you know it will be a prime target.

Altavista millicent

[Anonymous Coward]

Anyone remember millicents from digital altavista?
Actually, anyone remember alatavista?

Wonder if it's similar. They'd have to make it mad easier to use .. both for the content provider and the payer (that is no "are you sure? popop" or lame screen click thrus). It should be as simple as clicking a small red icon to turn it green causing to pay one cent. Maybe you get to use a few refund opportunities a month for misclicks. AJAX can come in here .. the content can appear instantly as u click the icon. It can look cool where encrypted/garbled text and/or images suddenly flips into understandable english.

good positioning for google

[DeveloperAdvantage]

Google has done a great job positioning themselves between consumers and basically anything they want to purchase. If you think about what a consumer needs to do when they make a purchase, two key steps are first to find something you want and then secondly to pay for it.

Through their search engine and paid advertising, they basically own Step 1. They act like a gatekeeper, deciding who sees what and really having a tremendous impact on the success of at least some businesses.

As for the second step of paying for an item, they don't yet have a presence, so this is the logical next step. When their system goes forward, I suspect eventually a little slice of every transaction will go into google's pocket.

Eventually people will start talking about paying a "google tax". Businesses will need to recover the expense of advertising and the expense of the transaction. Guess who they will recover it from?

Seems easy to implement

[tcornelissen]

I receive money from Google for my google adds. They've already have the sofware to transfer money from advertiser A to my account. I shouldn't be that complicated to instruct google to substract x amount from that figure and add it to the payment of Alice. Or to substract y ammount from Bob and add it to my payment.

If you comment on my English, please bear in mind how well you are doing on your third language.

Your understanding of money is incomplete

[snowwrestler]

Money is VERY easy to understand -- it is merely a store of time.

I had mod points but I'm giving them up to post a reply instead. In short, you are wrong. Money is very easy to understand, but it's not time--it is a placeholder for value. You are exchanged money for your time not because money represents time, but because money represents value, and your time has certain value. How much value your time has is the result of a human negotiation of differing opinions. Currency is simply the formalization of such negotiation.

Using a market-valued medium to exchange value (example: gold) is NOT a currency, it is simply an advanced form of barter, since the value of the exchange is limited by the market value of the medium.

Economics ultimately comes down to a human perception of value, and as such it is imaginary. Monetary value is imaginary--without human agreement it does not exist. Paper or digital money is an ideal currency for this reason, in that it does a better job of abstracting the human concept of value from the market worth of a limited-supply raw material such as gold.

Put another way, tangible materials like gold are zero-sum, while monetary value is not. If I IPO my hot new company and its stock price soars, the stock prices of other companies do not have to sink in compensation. Whereas if I want to buy a certain amount of gold, someone has to sell it to me.

To come back to your statement that money is literally time, consider the valuation of a start-up company like Google. What "time" is represented by the rapid valuation of that company? Consider the price difference between a BMW and a Hyundai...did the BMW take 3 times as long to make as the Hyundai? Consider salary differences...if money==time, why does a CEO make so much more money than you?

Every one of these questions can be understood by considering money as the placeholder for the negotiation of human opinions of value. As such it of course has implications of control, as in any negotiation one party is likely to be in a stronger position than the other, and therefore better able to bend the negotiations to their will. That's life. If you don't like people being able to control you or tell you what to do, you basically have two options--grow your strength so that YOU can exert the control, or drop out of society and live as a hermit.

Re:Your understanding of money is incomplete

[SeattleGameboy]

Man, that is a lot of BS...

For your information, Hyundai cars are rated consistently better than BMW in reliability (http://money.cnn.com/2004/11/08/pf/autos/cr_auto_ reliability/).

Sure, BMW may save you a lot of time in getting a chick in bed, but not in time spent in shop.

Not every good is valued on equal terms. Some are valued for its utility (save time), some are valued for its rarity (supply is significantly lower than demand), and some are just valued high because they can (say, Versace bags - they certainly don't take 1000X more to produce or last 1000X longer than a normal bag, but that does not stop Versace from pricing them 1000X more than a normal bag).

Perhaps you should come down from your high-CEO horse and stop sprouting your bugus arguments on how you are so "worth it".

Re:Your understanding of money is incomplete

[SeattleGameboy]

A typical executive answer - "my belief is truer than facts".

I am very happy that your expensive mechanic is telling you that BMW costs more to fix. That's nice. And if that was true, than BMW's would not break down more often than lowly Hyundai's. But guess what? THEY DO!!!

No matter how you try to get around the issue ("BMW owners will hold their car to a higher standard than a Hyundai owner generally will" - what a freakin BS!), it still does not change the fact that BMW's break down more often.

Have you even seen the CR survey? It is pretty detailed and non-judgemental. It just asks you if you had to bring your car in for a service, what part broke down (electrical, brakes, powertrain, etc.). How BMW owners would bring their cars for service more often because "they have a higher standard" is beyond me. Especially when Hyunday has longer and more comprehensive warranty which makes it less costly for the owners of Hyundai to bring it in for service than BMW owners (who would pay a LOT more out of their pocket).

People like you just make me laugh. I am sure you are the same guy who paid $500 bucks for a wine that you won't even be able to tell in a blind taste test.

I am happy for you that you have so much money that you can waste it how ever way you want.

But you are going to have to do a lot better than just saying "BMW's are better because I say so".

So lame....

HTTP status code 402

[DarkMan]

Someone is way ahead of you!

Re:Horizontal Expansion

[Monkeyman334]

At least at places where I get gas, there is an extra $.50 charge for paying at the pump. I think that's how they get money for credit card usage without actually charging an extra fee for credit card use (which would be against ToS).

Re:Horizontal Expansion

[Alex P Keaton in da]

Also, gas stations (Before anyone jumps on me, I said stations, i.e. the guy who owns the corner franchise, not the Oil Company) make very little of their money from gas. (Look it up, them make 2 or 3 cents per gallon) They make their money from cigs, lottery and other convenience items. So they want you to come in... Using the pay at the pump costs them a lot of sales...

Re:A bit out of date

[thrillseeker]

So registered charities with 81% overhead are ethical, or the registered ubercharity diverting 50% of a targeted donation for 9/11 victims is ethical, but this unregistered charity was deemed in advance to be unethical? PayPal decided where you could (or could not) spend your money for you - and that's ethical?

Obviously Micropayments

[a2800276]

I would be really suprised if Google's entry into the payment market wouldn't have to do with micropayments. Why dabble with peer-to-peer aka paypal payments? That market is already cornered.

Micropayments, on the other hand are really that big a technical challenge. All previous schemes have failed because of the chicken/egg problem. If they don't have enough users signed up, not content providers will signon and vice versa.

Google already has a gigantic video service which is a great initial content provider. Apart from that, hundreds of website operators will sign on immediately because they've been successful in the past.

As for users signing up, they've only got to get a few % of the millions of gmail users to type in a credit card number, or they could let the billions of "webmasters", who've got google ads on their pages but never make it to the minimum payout, spend their click-money on micropayments.

-tim