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PayPal v Google(Buy), WSJ Reports

By - February 05, 2006

The WSJ tossed this tidbit outside its paywall, so I’ll link to it…From the article:

While Google Chief Executive Eric Schmidt confirmed in press accounts (see here) that the company was building a payment service, Mr. Schmidt also denied it would directly compete with PayPal. Mr. Schmidt said Google didn’t intend to offer a “person-to-person, stored-value payments system,” which many people consider a description of PayPal’s service.

Mr. Jordan (PayPal chief) says he and his team immediately “dissected the wording” of Google’s statements. He says he doesn’t believe Mr. Schmidt….

…The Mountain View, Calif., Web-search giant, which has terrified Silicon Valley with its ability to quickly create new consumer products and services, is developing a rival service called GBuy. For the last nine months, Google has recruited online retailers to test GBuy, according to one person briefed on the service. GBuy will feature an icon posted alongside the paid-search ads of merchants, which Google hopes will tempt consumers to click on the ads, says this person. GBuy will also let consumers store their credit-card information on Google.

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  • http://www.omidyar.net/user/u596126023/ SorenG

    While I worry about Google’s attempts to take over just about everything web related, I think some competition in this area could be good. But it makes one ask, “Just how big is Google’s appeitite? Can they compete in so many different areas without exploding? And how will users view all this?” The payment area makes more sense to me then a video store does for them.

  • ED

    If there’s any web industry we need competition in, it’s online payment services. 3.5% transaction fees might be fine or even low in the world of e-tailers and retailers, but I’ve always felt it’s a bit high for ebayers. And now Paypal has announced that they’re not going to pay for the adminstering of the MoneyMarket fund any longer, it will instead be taken out of the interest rate.

    Over the years, paypal has gotten bigger, more bloated, and less customer friendly. Because all the other consumer web payments services have dried up. More competition is a good thing.

  • Mike Scott

    3.5% isn’t the problem, the minimum transaction charge is the problem. 3.5% would be just fine if they would take 3.5% of a two cent transaction, or 0.07 of a cent.

  • http://moneyinyourpocket.blogspot.com jocko

    This just goes to show that all internet businesses are under attack…all the time…Blogs have lowered the barrier to entry to the point where anyone can have a site where as years ago, it took a little bit of technical knowledge to manage content.

  • synergy

    Re: ‘But it makes one ask, “Just how big is Google’s appeitite? Can they compete in so many different areas without exploding?’

    Well, I trust Google a lot more than I trust the U.S. government and it is usually far more efficient at what it does.

  • William

    gpay and paypal will always be one of many options that users will have to purchase an item. Neither will ever be more than this. If I m a retailer I would want to except payment from as many sources as possible. I would not want to lock into any option that would exclude a fairly large amount of consumers. Paypal accepts credit cards as well as debit cards, and you can also use your paypal account. If Gpay is to succeed it will have to at the least mimic all of the paypal options. Once this is done what could the possible points of differentiation be?

  • Joe

    If we are going to discuss encroaching on each others core business this story ( http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=39443&Nid=18224&p=308014 )blows the gWallet out of the water!!!

    OK so an online publisher uses eBay to sell advertising space…been done on small scales before I guess. But if eBay builds a tool to manage all publishers who wish to auction of their online ad inventory…well I think there are more than a few AdSenser’s who don’t like sharing up to 70% of their revenue with Google.

  • http://itcommunism.com Charbax

    [url=http://slashdot.org/article.pl?sid=06/02/06/1429254]slashdotted[/url]

    Cool story!

  • http://www.smallroomsoftware.com tom

    I had expected Google to run a payment service for quite a while. It makes a lot of sense for them. They already have every online retailer battling against each other for adsense placement and before too long, accepting payment via a ‘google wallet’ type system will become unavoidable. This will certainly shake up the payment processing/merchant account market (while I think is a good thing) and probably make buying online safer/easier but probably not cheaper for the consumer. Online stores will fight amongst themselves for premium placement on the google shopping network and the costs will be passed on to the consumers.

  • http://www.buygoogle.com buygoogle

    That’s funny, I thought Google already had a pretty cool payments service. Didn’t they quietly roll out nicely streamlined payments as part of Google Video?

    Google Video validates the user’s credit card and street address one time and stores the results in your Google Account. Subsequent purchases are handled with just two clicks – Buy and Confirm.

    Feels like a payment service to me.

    And when Google allows individuals to get paid for uploaded content, then we’ll also have “person-to-person” payments, too.

    But since it only works for content delivered through Google, it’s not truly a PayPal competitor — I can’t email you a direct payment like I can through PayPal.

    Can’t you see this working for all kinds of electronic content? Like books, journal articles, stock market newsletters, DNA sequences and other “dark web” content that’s currently locked up? As long as Google is making the market and delivering the content, this works nicely.

  • http://500hats.typepad.com DaveMc500Hats

    They’re a legitimate threat, but payments won’t likely be conquered overnight by Google. They might be a significant competitor at some point, but i’d expect it will take a year or two to gain real traction. Even with big brains and a large existing customer base, it takes time to build a competitive online payment option and to handle the resultant fraud and customer service issues.

    That said, there are certainly some areas where PayPal hasn’t been innovating that could be oppportunities for Google. Digital goods would be a likely area that Paypal really hasn’t solved very well, particularly noting Google’s video store and other digital assets.

    will be interesting to watch how it plays out…

  • Arturo

    as more information assets are transacted on the network, payment systems like bitpass will become more important.
    http://corp.bitpass.com/marketplace/index.html

    paypal’s integration with ebay and physical goods retailers is extensive. google would be smart to enable micro-payments to video, music and software.

  • Nick

    Gbuy is not a good service, I work for a company that offers Gbuy. They are very unreliable and there has been alot of bugs and other issue associated with Gbuy. Many orders do not transfer correctly and customers are sometimes charged for items that are not placed on there orders. Also they have no Gbuy customer service and do not allow retailers to give out any contact information.