It must be the holidays. Just as it did last year, Google Checkout is trying to pay for market share in online payments. It is extending a “free transaction processing offer” until February 1, 2008. That means any merchant who uses Google Checkout, as opposed to Paypal, won’t have to pay any fees for items bought through Google’s payment service. Since Google is still eating the related Visa and Mastercard fees, it is clearly taking a loss here to gain market share.
This is a common tactic for Google, which has tried to to buy market share in other struggling areas as well, like its radio ads. With Google Checkout, the company is also leveraging the popularity of AdWords. After the free period is over, for every $1 that a merchant spends on AdWords, he will get $10 worth of Google Checkout sales processed for free. Google is using its dominance in search and search advertising to subsidize and break into other markets. That becomes easier to do as Google’s search market share keeps rising (comScore has it at 58.5 percent for October, Hitwise says 65 percent for November). Someone call the antitrust lawyers.
Below is an an e-mail sent to Google Checkout members yesterday:
From: “Google Checkout Team”
Date: December 11, 2007 12:47:57 PM PSSubject: Update on Google Checkout transaction processing fees
Hello,
We’re writing to let you know that Google Checkout’s free transaction
processing offer has been extended to February 1, 2008. At that time,
Google Checkout will be transitioning back to its standard fee
structure.You will still be able to earn free transaction processing if you use
Google AdWords – for every $1 you spend on AdWords, you will be able
to process $10 of sales through Checkout for free. For additional
sales, you’ll be charged a low 2.0% plus $0.20 per transaction. Fees
are the same for all payment types (Visa, MasterCard, American
Express, and Discover) and there are no monthly, setup, or gateway
fees. To learn more about Google Checkout fees, visit
http://checkout.google.com/seller/fees.htmlIf you’re an AdWords advertiser, make sure you link your AdWords
account with Checkout to earn free transaction processing. When you
link by February, 2008, your AdWords spend from January will count
towards free processing in February.For instructions on how to link your account, go to
http://checkout.google.com/support/sell/bin/answer.py?answer=80154&topic=13456
If you’ve already done so, you might want to check that you’ve linked
to the correct AdWords account. Just log in to your Checkout account
at http://checkout.google.com/sell/ click on the ‘Settings’ tab and
click on the ‘AdWords’ link at the left of the screen. Note that your
Checkout and AdWords accounts must be based on the same currency in
order to be linked.If you’re not yet a Google AdWords advertiser, you can learn more or
open an account at http://www.google.com/ads/adwords_checkout/ Google
AdWords can help grow your business by connecting you with customers
just as they are searching online for what you sell. With AdWords,
you’re always in control of your budget and you’ll pay only when
people click on your ads.Please visit our Help Center at
http://checkout.google.com/support/sell/?hlrm if you have any questions.Thank you for using Google Checkout!
The Google Checkout Team
Google Inc.
1600 Amphitheatre Parkway
Mountain View, CA 94043
Remember that Paypal did the same thing when it first started. If Google gets enough marketshare to get onto eBay, then it would become a serious competitor. eBay can ignore it only for so long.
Well, missy, time has not helped Google and Google Checkout. Their free offer ran all of 2007 and they have not gained much, if any. Good luck to them. PayPal killer it is not.
When PayPal gave these offers, it did not try and leverage it’s other areas – like adsense for Google. So, I think that these situations should not be compared.
I realize that this is a move to try and break into PayPal’s territory and I like that they are doing it.
Google has been taking serious blows into Microsoft with their search and web applications. I hope they will offer a similar blow to Paypal with this move and all that follow.
Good Work!
Bozo: How do you know how much they have gained? I use them all the time for sending invoices to people to receive payment, with no fees paid to Google. Love it!
MGZ
Well, for one, I read various trade journals and blogs and have seen various write-ups where growth is quite has been quite slow for Checkout and has a very low penetration percentage. This was back around September/October which was 9 or 10 months after they offered the deal starting back in January. I think a few early adopters even backed out (but they have gained a few other big adopters as well).
google is 0-2 in taking on ebay’s core markets. google base and checkout both are DOA
This is kind of like the chicken and the egg. Google cannot increase its Checkout user base unless merchants accept it as a payment and merchants wont spend money adding this feature to their site if there are no users.
Paypal has the advantage in that it allows you to send money to friends and therefore people will generally have funds in those accounts. I have both Paypal and Google Checkout accounts and most of the time I end up using Paypal just because I already have funds in the account. With Paypal recently introducing the debit card Master Card as a way of purchasing anything online or B&M, Google may start to see itself loosing market share.
The only incentive I see for site owners is when it comes to Adwords. If a merchant accepts Google Checkout their ads receive a little extra exposure in the form of the Google Checkout logo. These ads generally have a higher click through rate and will provide better return for the advertiser. I have suggested to nearly every client to accept Google Checkout specifically for this reason and no other.
If Google actually succeeds in gaining market share, the comparisons to MS are inevitable.
And before everyone starts explaining the differences in order to justify the tactics, please consider these statements:
“Google is using its dominance in search and search advertising to subsidize and break into other markets.”
“Microsoft is using its dominance in operating systems and desktop applications to subsidize and break into other markets.”
Anti-competitive is anti-competitive, no matter how you slice it.
PayPal and Google Checkout are two different products with two different purposes. PayPal aims to make profit per transaction, Google aims at collecting and exploiting who buys what where at what price and so on. Amazon Payments is more like PayPal and I prefer it. If you’re a serious merchant, 2% transaction fee is not an issue. You know that most merchants have coupons for 20% off, 30% off and even for higher discounts depending on their margin. Giving free marketing info to Google is an issue though. Or at least it is to serious businesses. PayPal and Amazon Payments are the two payment systems for serious merchants. Millions of people already have their credit cards with Amazon, so, it’s a natural choice. Their micropayment capability is also good. PayPal has the same, but you need to open a second account and it’s a headache. PayPal also has virtual terminal, which allows merchants to take offline payments. That’s a big plus, too!
We need more technology when we talk about paypal accounts…. the system is not the best!
If Google was smart, they would start a separate company providing this service so privacy or data capture wouldn’t be an issue, right now they know my traffic info via analytics, advertising through adsense and this is not including other programs I do not participate in such as gmail, adwords, this… too much info for one company in my opinion.
Jon
I much preferred the good old days when Google competed for market share simply by making the best product… It’s always been a kind of a fairy tale come true for me where Google came to become the dominant search player through having a superior product.
Gaggle crap is lame!
http://fakestev...er.blogspot.com
If only Google will accept international merchants
PayPal had Ebay and Amazon has itself. Google needs something else besides free processing in the short term to spur wider and quicker acceptance rates.
i was considering using google payments for cc processing until i saw the abject misery and lack of communication, support merchants using them endure on there own users newsgroup.
If Google Checkout wants to catch up with Paypal, they need to provide even bigger incentives to buyers. Remember when Paypal was giving away $5 for ever referral that signed up for your invite e-mail? Google Checkout could do the same. It worked for Paypal, it could work for Google Checkout.
Google Checkout also needs some better integration tools so approvals can occur in real-time (e.g. AuthorizeNet). Its kind of ridiculous that you have to wait for Google Checkout to approve the transaction. Could be seconds or hours…