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

A good online payment system is desperately needed

[Skapare]

... and PayPal certainly is not it. To begin with, such a payment system needs to work on a basis where you cannot ever have an account frozen except by court order. A payment system which gives a definitely point of guarantee is also needed, and credit cards certainly don't do that (charges can be reversed for a lengthy period of time). And such a system needs to be available to anyone who can properly identify themselves regardless of things like credit rating (i.e. don't grant credit and you won't need to check creditworthiness).

One possible system could work like this. You have a bank account with a bank that participates. You visit any web site offering to sell you something over this system and select your purchase. When the purchase reaches payment stage in checkout, you get a special code string from the seller that exactly identifies this one transaction, including final price. You take that code string (perhaps with the help of an added feature in the browser to avoid cut/paste operations) to your bank web site. You authenticate yourself to your bank to login, and provide this code string to make the payment. The bank does checks like having you verify the price. If you finalize the payment, it sends that information to a central clearinghouse and gives you back a new code string identifying the payment completion. This code string is passed back to the seller web site, who uses gives it to his bank to pick up the payment at the same central clearinghouse. At this point, it's now an irreversible cash payment.

While this system does not have the advantage of being able to reverse the payment as you might do with a credit card, it does have the advantage that the seller you sent payment to will not have any information about you, your bank account, or even which bank your account is with. They cannot double charge you. They cannot come back some other day and apply new charges. They cannot drain your bank account. All they got with their own bank verifying with the clearinghouse that someone paid the pending transaction, and the requested money really is in their account (and not in yours any longer).

The level of security you get with this system depends on your own bank. Just how much your bank demands of you to prove you have the authority to make payments from your account depends on how secure your bank wants to be ... and which bank you chose based on their security reputation. Unlike a credit card where your security depends on the seller's honesty and security vigilance, where you could lose money because of someone you didn't establish a security relationship with, this system would make your bank the focus of all your financial security (or banks if you choose to spread out in more than one). Thus you control the level of security you want by which bank you choose to do business with.

Most individuals would interface with their bank through a web interface accessed manually. You can be a seller and receive payments in low volume that way, too, if you want. Merchants would establish an automated arrangement with their bank (from among those that offer such) so they can generate transaction payment requests and verify payment completion messages quickly, rather than wait for some human to get around to doing it.

If you want to actually make payment under terms of credit, instead of using your own cash, then that's up to your bank to offer you the credit if they choose to do so. The seller won't know if the payment was based on a credit offering or not as that is just between you and your bank.

Of course, there will continue to be phishing scams to try to access your bank account so they can run some irreversible payments through to themselves from your money. But it is up to you and your bank to establish a level of security to prevent that. That could mean one of those smart cards that generates a password that changes every 30 seconds. Again, the level of security is something you choose