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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.
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.
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PayPal is top on my list of evil Internet companies. Maybe it's top on Google's as well.
Since it's IPO on April 30th 2004, Google seems to be testing the waters of a lot of different markets.
Granted, they all center on information technology, this company is ever expanding along different product lines. We've seen Google blogs, Picasa, Analytics, Video, Desktop, Talk, Earth, Toolbar, Gmail, Translate, Mobile, etc. And (thank god), they've all been presented to us rather benignly but are they all considered successes?
And now we observe GBuy, a service to compete with Paypal. Paypal's history has been rocky but they do have a solid foothold as they are almost married with eBay. Will eBay welcome the new GBuy and favor it equally with Paypal?
Google profits around $17 billion a year--do they really need to become a money transfer service? Ebay reports $4.5 billion a year, will they be sharing some of that with Google? Will a cut of that even matter to Google?
What's interesting is to see if they actually take a cut (a la Paypal) or if they just continue Google ads through the pages on the service to pay for all of the legal work that comes with claims and fraud. They have the resources to do it and this would probably kill sites like Paypal that take a 3% or more charge on each transaction.
My work here is dung.
Hi, I'm going to create a service similar to yours in the same industry, but I'm not going to directly compete with you.
If I was PayPal, I wouldn't believe Google either...
Mr. Universe: "They can't stop the signal, Mal. They can never stop the signal."
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.
pc-facile.com writes
Right. It's bad enough with submitters copy and paste from AP or Reuters reports, since that's mostly what the big news sites do anyway, but when you copy and paste someone's blog entry, we're just asking for speculative posts.
That said, I really wonder if there is much to this. With the Google-Skype deal, you'd think Google and eBay would be getting along better than to have Google launch a service directly competing with another eBay company. But then again, this is Google - how long until you can get "it" on GBay?
Look, after the various horrendous stories about Paypal (http://www.paypalsucks.com/) could we FINALLY get a worldwide viable alternative to Paypal?
I cancelled my account with Paypal after they decided to freeze the money people were donating for hurrican Katrina on somethingawful.com.
However I still cannot pay everywhere with a creditcard and to be honest, I'd rather not use my credit card everywhere.
PLEASE come with an alternative service Google, and one that I can use with my bank in the Netherlands please, since you have worldwide offices anyway.
Thanks.
Good news for the Internet services users. The more companies competing in the same area, the best prices for the users.
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Google has their hands in everything. If they develop a news site geared towards nerds, it's over.
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.
Unless Google can compete with eBay, it is going to massively lag behind PayPal, on account on PayPal's inertia from Ebay business and current use (eBay Paypal ties). The sites that Google links to typically accept Credit Card payments. PayPal, of course, allows such, but is necessary specifically for normal everyday people to accept credit cards (the eBay process). How does Google fit into this?
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?
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Google is providing good services in most of the areas they've ventured into, PayPal has a rocky history, and most PayPal users have at some point been frustrated by their service. However due to the nature of financial transactions they require a lot of security, and security and service don't always mix well -- at the very least we can say it takes skill to combine the two well. Maybe it's not PayPal's fault that we've been frustrated?
Hopefully Google's foray into this market will bring us some innovations like micropayments, which we've been awaiting for years -- and although we can only speculate on that, we can all be sure their involvement with payment systems will result in better products for us, whether it be from them, or competitors that are forced to enhance their services. I'm excited.
On the other side of the transaction - Google can tell what I've searched for, seen which of those searches actually turned into cash, and push yet more ads at me geared towards exactly what I pay for.
I hate the idea personally. You'd feel like you were in a shop all of the time you're looking for things on the net - a problem I already feel to some extent. I can see why both the placer of and the seller of an advert would love it however.
Cheers,
Ian
It might be foolish because of their relationship with eBay, but it's not evil. Of all the the things that Google's done lately that some might consider questionable, this isn't one of them.
Most of those stories come before eBay bought Paypal. I use paypal extensively, and also did before the buyout, and I find eBay really cleaned up their act.
As for the Katrina thing, it was perfectly valid and the right thing to do. Somehtingawful was not a registered charity and thus paypal had no way to differentiate what it was doing with the hundreds of scams going on at the time to defraud people. I actually applaud them for their pro-active approach in dealing with it - they *could* have just done nothing and let the fraudsters get away with it.
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.
Its a similar problem. I don't order ANYTHING from eBay anymore because the quality of the last few items I have bought were extremely poor. The standard is to sell your known-to-be-broken crap on eBay "as-is" and then say you believe it works, but can't guarantee it.
Also, you do not need to get a paypal account to pay for an item over paypal using a regular old credit card -- and then only the credit card TOS is relevant to you. So he didn't lose a sale because he has a paypal account, he lost a sale because of your ideology.
And really, boycotts rarely affect anyone but the boycotters.
Imagine if you weren't allowed to use roads because a bus company complained about your driving 3 times. --skunkpussy
Is it possible Eric Schmidt is telling the truth? Maybe they are actually going to only be in the business of securley storing and transmitting credit card info. Maybe going as far as being in the gateway business. Being a merchant of record as is Paypal is a huge step and is most unpleasant. Do they really want to be in the business of chasing down fraudsters and dealing with angry customers over chargebacks? Becoming a bank simply does not fit the mission statement in my view.
It's a perfectly cromulent word.
"When the atomic bomb goes off there's devastation...but when the atomic bong goes off there's celebraaaaation!"
I know what's going on! Google is making a digital bank! It'll be located on the island of Kinakuta in an abandoned Japanese "command center." Quick! Find Goto Dengo!
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.
Build a man a fire, he's warm for one night. Set him on fire, and he's warm for the rest of his life.
Someone is way ahead of you!
All perceptions of value are ultimately backed up by violence. Even gold has no value to you if you cannot keep others from taking it. Saying that there is nothing backing U.S. currency strikes me as very naive.
Build a man a fire, he's warm for one night. Set him on fire, and he's warm for the rest of his life.
and just perhaps, the relevant bit is "payments from user to user"
if they have been trial running it with merchants who sell stuff, perhaps they will only take payments from people and to businesses, not multiple individual to individual payments.
or something akin to microsofts original idea for 'microsoft wallet' where google keeps your cc info private to them, and authorizes payments to individual merchants in aggregate..
or micropayments tracked by google, billed to you every X days, (or paid in advance) in lump sum amounts that then make the cc discounts surviveable to the merchant charging (google finance)
there are more niche needs for financial transactions, than just paying for ebay items.
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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
As long as PayPal continues to REQUIRE your bank clearing numbers they will be EVIL.
Check the TOS. PayPal limits the amount you can buy on a regular account. Regardless of how you fund your account, i.e. bank card, credit card, checking account, etc., once the limit is hit your account is finished. That is unless you upgrade your account and give them your bank clearing numbers, a.k.a. unfettered access to your checking account any time the want.
This is the true horror story. PayPal is a SELLERS service. The say so themself. They try to insure that a buyer cannot bail on a sale. If they have your clearing numbers thay can enforce the transaction without recourse. It's like a wire transfer, one way and unreversable. So you cannot cry to the bank because they cannot get the money back. You have to get PayPal to send it back.
There is no reason why PayPal should need my clearing numbers for any reason other than they want access to my money in the event of a dispute with a seller. As long as I use my credit card for purchases I am covered for fradulent sales. The seller is never covered except by PayPal, if the have your clearing numbers.
These are the facts. It's all on PayPal's website it's just buried in the TOS. If you have not ran afoul of PayPal then you are one of the lucky ones but remember this. If they have your clearing numbers and for any reason they are stolen then you are royally screwed because with the clearing numbers someone can drain your checking account and you bank WILL NOT be able to reverse the transaction. Additionally, since it is a wire transfer the bank is not obligated to reimburse you for the loss.
Think about. Would you give the keys to your house to someone you didn't know? If not, why would you give the keys to your checking account to someone at all?
As long as Google lets me use my credit card as a funding mechanism for my account then I am all over it. Ask for the keys to my checking account and I will shop elsewhere.