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?

[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?

[roderickm]

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. There are thousands of web publishers that want to charge 2c to read a page (NYTimes?) but have no effective means to do so. A micropayment system might even be a necessary prerequisite to a hosted applications model -- some prognosticators are convinced Google will begin selling PCs with a Linux-based OS, hosting applications on a subscription or pay-per-use model. Would you pay 1c every time you opened Google's continuall-improved word processor?

Also, Google enjoys loads more user trust than Paypal. I've moved over $10,000 through Paypal, but they wouldn't lift a finger to help me when I was the victim of a $500 fraud. There are many stories of unduly locked/suspended accounts and a severe lack of investigatory dur diligence on Paypal's part. If Google brings a "Do No Evil" alternative payment system, you better believe I'll switch.

Finally, eBay might not like Google developing a competitor to Paypal (assuming it actually will be... RTFA), but eBay's bread and butter is listing and final value fees, not Paypal transaction charges. I'd bet eBay is much more concerned about Google Base than about a payment system. Of course, the combined threat (of Google Base and a Google Payments) is massive.

roderickm

Re:Why Bite the Hand that Feeds?

[Superfreaker]

The times they are a changin'
That old MP argument is not going to hold up forever:

PayPal Announces Micropayment pricing:
http://www.paypal.com/activate_micropayments_5pct_ plus_5cents_new_account_pricing

On August 31st, 2005, PayPal announced new Micropayments rate of 5% + $0.05 per transaction.

The rate is available now, to U.S. merchants who sell digital content to U.S. customers, when PayPal is the sole payment solution offered to customers for micropayments transactions.

Merchants who wish to use PayPal's micropayments pricing will need to open a new PayPal account through the account registration link at the bottom of this note.

Each PayPal account is associated with only one merchant processing rate. That rate determines the fee that's applied to funds received into that account (additional information on PayPal's Standard Fees is available at: http://www.paypal.com/cgi-bin/webscr?cmd=_display- fees-outside ). For example: if your Premier/Business Account rate for receiving funds is 2.9% + $0.30, using PayPal's 5% + $0.05 micropayments rate would reduce the total transaction fee charged to payments received below the value of $12 (per payment). However, if you accept payments that are greater than $12, you would pay a lower processing charge by accepting the payment into the account set with the 2.9% + $0.30 rate.

If you wish to leverage PayPal's micropayments pricing, please open a new browser window and paste the link below into the URL field to open your new PayPal account with micropayments pricing of 5% + $0.05.

Re:Why Bite the Hand that Feeds?

[rockwood]

I hear what you are saying as I feel that I am in the same boat. I have a website where my wife an I sell primitive countr crafts. We're averaging $2000.00 to $3000.00 in gross profits per month, netting about half of that. We are currently using paypal as well, though out largest problem is refunding. Items become out of stock and with the current paypal system the customer is charged immediately upon checkout. That leaves us with estimating S&H and providing refunds when only partial shipments can fulfilled. I feel that this leaves a unprofessional after-taste in the consumers mouth (and wallet). Some previous businesses we've had were good, other not so good, and with previously being divorced, our credit is not stellar. This poor credit holds us back from obtaining a virtual terminal; which would allow us to process CC's after the sale when we know the exact correct amount charge. Out efforts to provide our custoemr with more accurate (and sometimes lower rates) are shot down by our credit. So as it stands the consumer is the one that hurts the most, and becomes a mere inconvenience for us.

A non-interactive virtual terminal would suit the industry much more. Example: Paypal system current use their (PayPal's) trustworthiness and not the business, since it hides the consumers CC from us. A virtual terminal would need to be approved based on such things as credit ratings to avoid shady business from over-charging or errounously charging customers CC's because with a Virtual terminal we (the business) have the CC # in order to process this.

What would be more beneficial would be to have a combination of the two - allowing the customer to check-out, provide their personal information and CC information. Then when we've determined tha exact amount to charge, we'd access the limited virtual terminal. Enter the amount to be charged, the customer receives a confirmation email asking them to accept or deny the charges. They accept and we get paid.

I'm sure this has potential holes in it yet, but the foundation of what it could pave in regards to new doors opening for lower level new businesses, and home based businesses that have concepts that are working, but do not have the credit history to back it up with conventional means.

For the professionalism alone I'd pay .25 extra per transaction. The demand is there, it's just time until someone with the large bank account can deploy it. Hopefully this will be Google.

Google

[propertechdotnet]

Google has their hands in everything. If they develop a news site geared towards nerds, it's over.

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.

Re:Yes, please.

[thrillseeker]

Google aids in the censoring of the Chinese populace for profit

Anytime you buy a product that is made is China you have aided the government of China in thier domination of the Chinese people. Are you going to quit buying anything made in China? - good luck with that endeavor.

While (mostly) all of us would like to see the Chinese people free, it's not gonna happen overnight or simply by us wishing upon a star. It will either happen quickly with war (damn unpleasant affair) or much more slowly with (ever growing) free markets. Every little thing that causes the Chinese people to improve their own standard of living will pressure their government to get more of it - the Chinese government likes being in power because that is where the wealth is in that country. Create a generally higher level of wealth and the country will become a better place, because the people there are far bigger than their government.