Open your wallet to Google

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Analysts said Google's system could solve the so-called micropayment problem, enabling people to pay for services and products in small increments and for single items. For example, a user could buy one news article at a subscription-only site, rather than having to shell out for a monthly membership.

"It's not an efficient use of credit card charges for just $1 or $2," said John Barrett, director of research at Parks Associates. "While people are surfing around, and they see a Web page and a piece of content they want, they can be charged a small amount for it."

Google could syndicate the payment system, much as it does with its AdSense program, which lets Web sites host advertisements and receive money when people click on the ads. Such a "payment solution would grease the wheels...and allow anybody to start selling on the Web through Google," Barrett said.

A Google payment system could also pose a threat to credit card companies, Rashtchy said. "Eventually, people could fund their Google Wallet directly from their bank accounts, and merchants would be paid directly by Google, eliminating the 3 percent they have to pay to credit card companies," he said.

Existing credit card processing is too expensive for a lot of smaller merchants, who typically pay about 3 percent commission to credit card companies, Rashtchy said. "Three percent is too high if the margins are 10 to 15 percent," he said.

In a research report released June 9, RBC Capital Markets analyst Jordan Rohan said Google was set to launch Gbuy on June 28 and said it would be a direct competitor to PayPal's "off-eBay" initiative, which refers to Web sites not related to eBay. While Gbuy would be focused on consumer-to-merchant transactions, it could be expanded to consumer-to-consumer, Rohan said. The transaction charge would be expected to be about 2 percent, in line with PayPal's, he said.

With Gbuy, Google would be able to capture all transaction data flowing through the system, enabling it to use that data for targeting in future searches and to identify which categories and keyword bids are offering the highest return on investment for advertisers, Rohan wrote. "Longer-term, it could be a game-changer," he said.

A year ago, when rumors were circulating about a Google Wallet, Forrester analyst Charlene Li wrote in a blog that such a system could allow bloggers and other types of Web publishers to easily sell anything they wanted and even to have items aggregated by Google. "It doesn't make sense for Google to only challenge eBay/PayPal in this area--even though it will bring in close to $1 billion in revenue for eBay this year," she wrote. "Instead, I think (and hope) that Google is thinking much, much bigger."

PayPal spokeswoman Sara Bettencourt said, "We don't comment on other companies' products, especially this one, because it is not even in the marketplace."

But the rumors have undoubtedly been on the minds of eBay executives, who announced a partnership with Yahoo in May under which Yahoo will feature PayPal on its Web sites and eBay will use Yahoo ads.

Forget about PayPal, said Stephen Arnold, author of "The Google Legacy." Google's wallet product is one small piece of a much larger puzzle, he said.

"The (payment) plumbing has been there since they took the first credit card payment for an ad about two-and-a-half or three years ago," Arnold said. "What the heck is Google doing with all this financial plumbing?"

[kieranmullen]

Please compete with paypal

Granted paypal is cheaper than a merchant accounts, paypal user to user transactions with accounts that are already funded should not charge the same for those transactions. Right now it is about ~3% For merchants this is a lot of money.

Ebay is raking it in without any improvements on service or features. (google all the "I hate paypal" websites and "Paypal sucks" websites.

I would like to see google enter this market.

KM

[kieranmullen]

Please compete with paypal

Granted paypal is cheaper than a merchant accounts, paypal user to user transactions with accounts that are already funded should not charge the same for those transactions. Right now it is about ~3% For merchants this is a lot of money.

Ebay is raking it in without any improvements on service or features. (google all the "I hate paypal" websites and "Paypal sucks" websites.

I would like to see google enter this market.

Kieran Mullen

[inachu]

I would love to see GOOGLE cards in check out lanes

Just think among the ITUNES and WORLD OF WARCRAFT cards that we buy for online purchases and gameplay that google could come out ahead of any only payment system if they had a prepaid card that anyone could buy at any retail store like BEST BUY or Safeway and Giant.

Just thnk of the ability to transfer the emoney to any other online store.

So far just a pipe dream.

[df561]

hey nice idea!!!

that would be very useful for kids or people who want to buy online but dont have a credit card or bank account.

No Thanks

I got a kick out of this:

"Give Google credit for one thing: The search giant has a way of generating a lot of buzz."

No, google doesnt generate buzz. Its the media types who generate the buzz by fawning all over google to prove to their fellow media types how 'hip' and 'tech savvy' they are.

Anyways, Google's got enough control of the worlds information. The last thing that company needs is control over finances. I'll stick to paypal, thanks.

As for chance of success - eh. I know its all the fad to swoon over google, but truth is other than searching and online advertising, they havent had tons of success at any of their other apps. Google video? awful. Froogle? Near useless. Google Earth? Fun, but they didnt even write it (A sin for microsoft, but google gets a pass from the geek crowd I guess). EBay, on the other hand, has a consistent record of success in the financial realm. My money stays with them.

[t8]

Google is a good company

Google makes the Web work.
Website owners can create good websites and let Google make money for them. Before Google, you had to do everything yourself. i.e., get the advertising or sell a product, and do the marketing.

These days you can create an interesting website, and use Google services to get the traffic, and the best part is Google ads pay you for your effort.

What other company gives an incentive to create a good website? Certainly not Microsoft, they are too busy with Windoze to innovate on the Web.

Go Google :)

The web existed before google

"What other company gives an incentive to create a good website? Certainly not Microsoft,"

You mean, the same microsoft who put a web browser on every desktop? If not them, what about netscape? Those two have had far bigger impacts on 'providing incentive to create a website' than google ever will have.

[The user with no name]

good company to spy on you

Let me see...

I delete mail in my Gmail account and Google keeps it around on their servers for as long as they want to, use it in ways that make them money and open me to the risk that it will be retrieved in a future lawsuit or possible government invasion of my privacy...

I google this and I google that and all the while Google is tracking me and monitoring my usuage so as to better 'serve me' with ads...

Do I REALLY want them keeping track of what I buy, when I buy it and how often just so they can 'know my habits' better to make them more profit?

Nope... not me!

Though I do wish PayPal was accepted at more websites for online transactions... but they are getting more and more sites to use them!

[thedreaming]

Competition is good

It's good that google is trying to put out a similar product to paypal cause right now, they don't have any competition and it's competition that forces companies to change pricing to benefit consumers.