Paypal’s new Pal?- Checkout

Filed under:: Checkout,online payment,competition for paypal

With the launch of its online payment system – Checkout, Google is surely going to change the way consumers manage their e-wallet.

First things first. It’s not a beta product (yay!)

How does it work?

  • All you need to do is create a Google account (i.e. register your credit card/payment/ tax id/shipment info etc):
  • While making the payment for your shopping, enter your google account info and that’s it!!

One of the major reasons why merchants and consumers would like to switch to Checkout will be its ease of use, and also:

  • Checkout aims to minimize the no. of clicks/steps while making an online purchase.(thereby expediting the purchase process, and reducing the no. of aborted shopping)
  • The payment/credit card info will reside with Google and is not shared with the merchant.
  • Merchant Review/Ratings by the checkout users – users can rate the merchants (on the lines of eBay’s rating system)

Merchants using this system will be charged a processing fee of 20 cents per transaction (around 2/3 of Paypal’s fee), plus 2.2 percent of the relevant purchase price.

Promoting its Adword program, Google plans to give huge discounts/incentives to merchants who are using Google’s Adwords program.

What it means for Paypal

A Strong/ruthless competition. An unofficial survey by DigitalPoint reveals that 43% will switch to Google, while 40% say that they don’t know (which means they can be easily influenced)

Although Paypal has a huge customer base (105 million) and an exclusive partnership with Yahoo/eBay and leading sites, it wont be an easy path anymore. eBay’s stock has already suffered owing to the Checkout scare.

What it means for advertisers?
Google has integrated Checkout with Adwords (merchants who are on both Adword and checkout will see the checkout badge along with their ad, meaning that the advertiser accepts checkout payment)

This might give an unfair advantage to advertisers who are part of Adwords program.

Because, the searcher is(or will be) comfortable paying with Checkout – a natural propensity would be to buy from only those merchants who accept Checkout payments(the displayed badge in the Google ad), and skip the ones who aren’t!

And since Google ranks ads based on their clicks/popularity, the ones who aren’t displaying Checkout badge will be at a huge disadvantage.

Not too sure whether google will use the buyer’s keyword search etc related info for its CPA initiative?

Related: Watch Checkout’s video tour
Google -The Road Ahead