Google arrives at the Checkout

by Verity Meagher

On June 29, 2006 Google announced the American launch of Google Checkout (http://checkout.google.com) a long anticipated online-payment service.

This new service offers consumers and merchants an alternative to existing online shopping and credit card systems. Google Checkout is similar to current payment processing methods, for example PayPal, as customers can effortlessly make online payments for goods and services. However Google has included an enticing deal for merchants, by charging them lower fees and rebates on Google AdWords advertising.

What is Google Checkout?

Google Checkout services claim to make online shopping faster, more convenient and more secure for Google users. Customers can access their account with a single Google login by initially entering their billing, shipping and credit card information. This single login, in conjunction with a direct checkout icon next to the desired product, supposedly ensures a rapid purchase. Once the product is purchased, Google Checkout provides a purchase history where the customer can track their orders and shipping details on one site.

The service endeavours to simplify and improve the online purchase experience for both consumers and merchants. Consequently attracting more advertisers by providing a direct link between products advertised on Google and consumers purchasing these products.

Features of Checkout

Google Checkout promotes enhanced security, which conceals the buyer’s credit card number and provides reimbursement for unauthorized purchases. The consumer is able to block unwanted spam from online stores. Consequently, the Google Checkout icon identifies fast, secure places to shop when searching – to be mainly used in conjunction with Google search.

Google Checkout has created incentives for merchants. In an effort to offer advertisers a complete solution, Google has linked their search-advertising program (AdWords) to Checkout. This direct link results in a way merchants can track, with certainty, how their AdWords campaign is directly affecting sales. Therefore online stores can apparently attract new customers, increase sales and process them for free. As an incentive, for every $1 a company spends on AdWords, Google will waive the fees on $10 worth of purchases.

Of course there are restrictions associated with this service. The central issue being, the store from which you wish to purchase must feature the Google Checkout. Any website can add Google Checkout as a payment processing method by cutting and pasting HTML, or web code, into the site. Large companies, eCommerce and shopping integration providers can also integrate it as an option within their existing shopping cart systems.

PayPal now has competition

There is now a direct competitive threat between Google Checkout, PayPal and Amazon Payments. Google executives, however, consider them very different types of products. Google Checkout focuses on improving the checkout process, by aiming to create an immediate link between the advertisement and the purchase.

Analysts say this service will sustain Google's growing search revenues, by making it more likely searchers will convert into customers, thus making their clicks more valuable.

Yahoo (the other main seller of advertising on search results) has recently announced an alliance with eBay – which will encourage Yahoo advertisers to use PayPal for payment processing. However details have not yet been released.

eBay has recently banned sellers from requesting payment through Google Checkout. eBay’s Safe Payments policy states that a payment service must have a “substantial historical track record of providing safe and reliable financial and/or banking related services”. As it is new and untested, Google Checkout does not fall into this category yet.

When comparing the fee structures, Google Checkout certainly has very compatible pricing.

Google Checkout charges 2.2% plus $0.20 per transaction.

PayPal charges 2.9% plus $0.30 per transaction

Typical Merchant Facility Rates range from 1.9% – 2.5% plus $0.30 per transaction (all prices in US dollars).

The future for Google Checkout

Analysts have forecasted that merchants and shoppers will successfully adopt Google Checkout, as long as they feel it is secure. In today’s volatile eCommerce market, a growing number of consumers are concerned with fraud on online auction sites. Therefore by making Google-approved merchants, with credit-card protections some of these fears might be alleviated.

The service is currently restricted to merchants in the United States, whether they advertise with Google or not. Google Checkout is predicted to have an international release in the near future - but with Australian Merchants still waiting for a release of Google's comparison shopping tool, Froogle 3 years after its beta release in the US, we could be in for a bit of a wait.

Further Reading

Google Checkout Website