DailyTech - Google Checkout Goes Fee-less in 2007

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IT Google Checkout Goes Fee-less in 2007
Tuan Nguyen (Blog) - December 7, 2006 12:01 PM

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35 comment(s) - last by jimmys.. on Jan 4 at 3:48 PM

Google takes a leading edge over PayPal

According to reports, Google will be eliminating fees from its online payment, Checkout. To compete better with PayPal, Google is letting merchants use its Checkout system to process payments without taking a hit on transactions. Traditionally, merchants who use PayPal take a 2.9-percent hit on the total value of a transaction plus another 30-cents for actually processing a transaction. Over the years, many PayPal users have scoffed at the high fees that PayPal enforces on its customers. Despite this however, PayPal remained a growing and popular online payment service for users worldwide.

Google told reporters that its feeless Checkout process will begin in 2007 with no indication on whether or not this will be a permanent change. Still, representatives from Google made it clear that Checkout was never meant to be a competitor to PayPal. Instead, Benjamin Ling, who is in charge of Checkout said that the service was meant to make it easier for customers to actually make a purchase -- less clicking and fewer sign-in steps.

Earlier last month, Google offered a variety of rebates that customers could use when making purchases, such as $10 off $30 purchases. The promotion was so successful that PayPal quickly announced a similar program for its users not long after.

Currently, PayPal is still the world leader in online payment. The company said that it has roughly 123 million account holders, many of which process hundreds if not thousands of small transactions on a daily basis. Do the math and anyone can see that PayPal's revenue quickly adds up. Google's model to most of its services have always been "free," and it will be interesting to see how Checkout can hold up in 2007 when it too will be free to use. Although Google did not indicated how many account holders it has, the service is clearly growing on a daily basis. Ling mentioned to reporters that "once people use our service, they love it."

Indeed people do love Checkout."I'm thrilled. The online business is really competitive, and every little percentage helps," said Sportscloseouts.com owner Lanny Morton.

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They have to be

By Dfere on 12/7/2006 2:26:32 PM , Rating: 3

Betting on advertising revenues, banners, something. Although this probably makes the most sense (i.e. ads on a shopping site have a better response than during email sessions...)

RE: They have to be

By edpsx on 12/7/2006 2:53:18 PM , Rating: 2

Wow.. paypal is gonna have to do the same or they just lost my business of 6 years.

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RE: They have to be

By Beefy6969 on 12/7/2006 2:57:27 PM , Rating: 2

Any news of a free classified listing program like that of craigslist? If so, ebay/paypal can kiss my ass goodbye.

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RE: They have to be

By kamel5547 on 12/7/2006 4:42:50 PM , Rating: 2

Unless you happen to use e-bay, in which case your stuck with paypal (don't you just love it when companies become more and more integrated?).

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RE: They have to be

By bighairycamel on 12/11/2006 7:25:15 AM , Rating: 2

You're not stuck at all. You can request buyers pay by any means you tell them to. Just because Google Checkout won't be integrated into the EBay system, you can still tell users to send money through it.

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RE: They have to be

By ElJefe69 on 12/11/2006 5:18:17 AM , Rating: 2

they should lose it immediately!

Addwords and fees worked hand in hand, making high priced adwords much much cheaper to run if you had a lot of fees like I do.

now its free. whacked.

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RE: They have to be

By OrSin on 12/7/2006 3:00:15 PM , Rating: 3

Considering how much I hate paypals I'm glad someone came along to put them in thier place. Paypal fees are now higher then credit cards and that makes no since.
Plus credit card interface and billing is so much nice for the merchant and the buyer. Google interface face for the buyer is smoother and quick.

Starting to hate e-bay/Paypals as much as others hate MS :)

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RE: They have to be

By superyifan on 12/7/2006 3:07:48 PM , Rating: 2

I can second my hatred against Paypal. They screw people left and right and get away with it because they belong to Ebay and are a monopoly in the sector.
Good to see Google indirectly compete with them.

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RE: They have to be

By Oregonian2 on 12/7/2006 5:51:59 PM , Rating: 3

Makes sense to me that they charge at least as much as credit cards seeing as how whenever I buy something from eBay using PayPal I use my credit card, so they are doing credit card services for the seller in addition to providing the easy web payment service.

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RE: They have to be

By Kuroyama on 12/8/2006 1:36:22 PM , Rating: 1

The default payment method for Paypal is your bank account, so unless you force them to use your credit card then they are basically paying nothing for the transaction and yet they charge fees higher than the credit card fee. If they had a tiered fee structure and bank payment was a lower fee then I wouldn't have quite such negative feelings about them.

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RE: They have to be

By Oregonian2 on 12/8/2006 1:54:44 PM , Rating: 2

"force them to use your credit card" I think is a bit of an overstatement. Yes, it defaults to a bank transfer, and it's obvious why they prefer that, but selection of one's credit card is just a three or four mouse clicks away. You aren't forcing them so much, as just selecting your credit card. And I do that every time so it hardly takes any time at all to do so.

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RE: They have to be

By animedude on 12/8/2006 1:53:03 PM , Rating: 2

Don't you think they get a super duper crazy deal from the credit card company? My guess is the fee that credit card companies charge is around 1%. PayPal takes the other 1.8% for themselves.

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RE: They have to be

By Oregonian2 on 12/8/2006 1:57:32 PM , Rating: 2

They would be paying both the credit card company their fees plus have to pay a bank for their transaction handling unless PayPal has gotten approval to be a bank (which I don't think they have).

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RE: They have to be

By theflux on 12/7/2006 3:01:55 PM , Rating: 5

It is just another way for them to better target their ads. They will be able to mine the data of what people are actually purchasing. I think it works out well for everyone: advertisers, consumers, merchants, and last but not least Google. I guess it doesn't work out so great for PayPal though.

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RE: They have to be

By Xavian on 12/7/2006 3:31:03 PM , Rating: 3

Paypal has been unopposed in the market for a very long time though, so its about time someone came along and started competing and now we are gonna see the benefits of it.

Capitalism in action!

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RE: They have to be

By Oregonian2 on 12/7/2006 7:06:22 PM , Rating: 2

Actually, they were opposed by Ebay's company "Bidpay".

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RE: They have to be

By Oregonian2 on 12/7/2006 7:18:34 PM , Rating: 2

Now that I think about it, there also were (and may still be) services by Western Union and some others which were alternatives to PayPal. Those others, however, either charged the customer a fee and/or charged much higher fees than Paypal. Seeing as how buyers choose, the ones that charged the buyer were not popular (duh) and those that charged more weren't popular with anybody (duh). Paypal simply provide the best service -- and is why they grew like heck and "made" Ebay buy them. I think originally they made their money on the "float" which you had to allow them to keep when one signed up with them (interest on the money during the few days they'd have it between buyer and seller). I think this later wasn't allowed (or wasn't enough with interest rates going too low) and they had to charge things more traditionally.

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RE: They have to be

By Oregonian2 on 12/7/2006 7:05:27 PM , Rating: 2

If people just already bought whatever it is, isn't it already too late to show them ads for it (most of the time)?

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Google Auctions

By TheDoc9 on 12/7/2006 5:23:52 PM , Rating: 1

Hopefully this will be the begining of something to destroy that destroys the greedy bastards at ebay/paypal. I would never go to ebay again if google came up with a good auction site, there time is over, they've ripped off too many people.

RE: Google Auctions

By Oregonian2 on 12/7/2006 7:09:05 PM , Rating: 2

Yes. What is this country coming to when companies want to be profitable unlike the good 'ol days when the internet was booming and companies could provide services for little or no money while they themselves were losing money hand over fist. Where did those great companies go to, and why aren't they still providing those services? They certainly were popular enough!

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RE: Google Auctions

By cunning plan on 12/8/2006 9:21:15 AM , Rating: 1

DAM right! well said that man.. I also hate egay, their feedback system is flawed for two reasons, first the seller now doesnt leave you feedback until you have left it for them - this means that even if something is wrong with the item, most people dont want bad feedback themselves so do not leave the negative feedback. Second, if the seller is big enough, egay will do WHATEVER that person wants, bascially if someone is selling 10 computers a day pay pal and egay are raking it in from them, FROM experience, if you leave genunine negative feedback for that seller they contact egay to whine and have it removed EVEN IF the FB conforms for all egay regulations. So when you see someone with 99% / 100% FB do not believe it - its aload of **** - think of all the mutually withdrawn / blackmailed good feedback / and feedback removed by egay becuase the seller says so.

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RE: Google Auctions

By Oregonian2 on 12/8/2006 2:00:34 PM , Rating: 2

You would prefer an equivalent Google auction site that has no feedback at all (seeing as how a perfect system isn't humanly or computerly possible)? You try to make your eBay purchases from people with a feedback of zero?

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RE: Google Auctions

By Oregonian2 on 12/8/2006 2:02:12 PM , Rating: 2

P.S. - Ebay should believe the buyer just because the buyer said so?

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RE: Google Auctions

By jarman on 12/9/2006 2:01:02 PM , Rating: 2

Oregonian2,
You're working eBay damage control pretty hard here. How is the ol' eBay 401k, or is it PayPal?

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RE: Google Auctions

By Oregonian2 on 12/11/2006 8:52:10 PM , Rating: 2

There are things to kick Paypal for, but the stuff above aren't it. Just drives me crazy that folk have unreasonable "lemming" political correct ideas and attack a big company unreasonably to be popular. A lot of the stuff mentioned are things the "blaster" would do themselves if they themselves ran PayPal because they're reasonable things. Like making a profit. I know many like to have free services and to have big companies lose money on each transaction -- but make it up in volume as the joke goes, but it's a joke. I expect to have to pay for services rendered me, and this seems to be a new idea to some.

I am a volunteer webmaster for a local registered non-profit museum-like organization. We sell a few things on the web, and we use paypal. Is paypal cheap? Not really. Are they expensive? Not really. Big thing is that we're such a tiny organization and sell so little volume that's is amazing that there's a service for us at all. Paypal gives tremendous support for development even for the tiny seller, and makes it fairly easy (despite some idiot limitations that drove me crazy -- but those weren't complained about above).

Again, Paypal has their faults, but they wanting to make a profit isn't one of them, even if being in favor of big companies to profit isn't politically correct. I find that if they profit, they'll continue doing what I want, and that's servicing me. If they don't profit, I find that they stop servicing me. I've personally been using Paypal since long before Ebay bought them out (although my rating is only about 350 or so, as the occasional purchaser and not a seller on eBay other than once or twice) and they haven't caused me any problems (yet).

And no, I have no financial relationship with them other than being a long time satisfied customer.

I only have an eBay 401K in the sense that I've a garage and attic full of junk up the kazoo that I'd probably not get around to sell until I'm retired. :-)

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Free Until end of 2007?

By prontospyder on 12/7/2006 3:52:22 PM , Rating: 3

according to their seller page, it says: "New! Process sales for free.
Process your Google Checkout sales for free until the end of 2007."

RE: Free Until end of 2007?

By PrinceGaz on 12/7/2006 5:48:33 PM , Rating: 2

Well that's a year and a bit. A year and a bit without PayPal's punitive charges.

Maybe come the end of 2007, the competition will have forced all players in the online payment market to offer the best package they can, instead of the current situation where PayPal rakes in large amounts of money on every transaction.

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RE: Free Until end of 2007?

By Oregonian2 on 12/11/2006 8:57:17 PM , Rating: 2

On the non-profit website that I run (as a volunteer), the average sale is one where paypal gets maybe a dollar to give us cash out of the customer's credit card. That's the huge money grab you're talking about?

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Paypal screwing people over

By Nocturnal on 12/7/2006 6:01:49 PM , Rating: 3

I was reading this article yesterday and then found myself reading the paypalsucks.com forums. It's pretty bad. I hope Google eventually decides to compete head on with Paypal for their share of users. I would definitely like to see competition in this market, it needs to be done.

RE: Paypal screwing people over

By feelingshorter on 12/9/2006 12:56:10 PM , Rating: 2

Like the article said, Google checkout isn't meant to compete with Paypal [its meant to obliterate it].

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How will they do it?

By kibets on 12/7/2006 3:39:18 PM , Rating: 2

quote:
Traditionally, merchants who use PayPal take a 2.9-percent hit on the total value of a transaction plus another 30-cents for actually processing a transaction.

This is only true if you don't have a merchant account with Pay Pal. I only pay 2.1% which is better than other credit card processors such as authorize.net.

I can't see Google doing the for free, what will they put my competitors ads in my shopping cart!

RE: How will they do it?

By cochy on 12/7/2006 6:39:37 PM , Rating: 2

I don't know. They will certainly be losing money since there are banking and credit card fees incurred when Google would charge a cc to pay for a purchase or make a deposit or withdrawal from a bank account.

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Paypal will never go under

By Randalllind on 12/11/2006 10:31:02 AM , Rating: 2

It like the only payment for Ebay and also with Google checkout can you send money to people yet?

Or is it just for businesses?

Competition is good, however.....

By jimmys on 1/4/2007 3:48:47 PM , Rating: 2

All of you sellers that complain about Ebay/Paypal fees, please just buy some Ebay shares and you will realize gains that far exceed any loss from a small fee increase. It may be in your best interest to join the big, ugly monster to take some of the pain away....that's what I decided to do years ago and it has paid off handsomely.