Will paypal and other payment processor wait for what is coming their way? Google is preparing an online payment system that would compete with PayPal, according to an online retailer who has been approached by Google to take part in the effort. In addition to representing a direct challenge to eBay, which owns PayPal, the largest Internet payment system, the move signals Google’s intention to become much more deeply involved in online commerce.
In April, Google filed documents to create Google Payments, a company in California. The development was disclosed by SearchEngineWatch, a newsletter. Sara Bettencourt, a spokeswoman for PayPal, said the company had heard rumors of a Google payment service but would not comment further. PayPal has 72 million accounts and handled $6.2 billion in payments in the first quarter. One question about the prospective Google service is how ambitious it will be. Yahoo, Amazon, Microsoft and other companies offer “wallet” services that allow users to store credit card numbers for use while shopping at participating merchants.
PayPal also allows such credit card purchases, and it gives users accounts where they can deposit and withdraw money via electronic transfers to bank accounts. This allows PayPal to be used to send money between individuals. Wingo said merchants had told him that Google’s system was intended to rival the broad scope of PayPal rather than the narrow wallet systems. The prospect of a payment system could help Google’s core search advertising business as well, analysts said. Google has a trove of data about what Web sites people visit. Data about what people actually purchase could help it offer more effective advertisements. Some merchants wonder what Google could offer that would make its service more attractive than their own credit card systems. “I have nothing bad to say about Google, but I don’t see what the advantage would be,” said Michael Golden, chief executive of Homeclick.com, an online store. He said he accepted PayPal only for the part of his business that conducted auctions on eBay. But others suggested that just as eBay can promote PayPal, Google’s reach and reputation could help promote its service. Google could, for example, place an icon on advertisements, or listings on Froogle, indicating that certain stores accepted its payment system.
What action plan will paypal take ?let wait and see
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Filed under: Internet Business Strategy
