Google to launch payment service

Dubbed Google Checkout, the system is designed to boost Google's main source of revenue - selling advertising.

The service will offer some free order processing to Google's millions of advertisers, but will initially be available only to shoppers in the US.

EBay unit Paypal is the market leader in online payments, and eBay stock has slipped ahead of Checkout's launch.

Checkout's long testing process - it has been in the works for a year or more - has meant that rumours have been rife about the service, which many had dubbed "Gbuy" .

Google says it will enable shoppers to set up a single account with all their credit card and delivery details, allowing online merchants to sell through their Google advertising.

For every dollar they spend on advertising, merchants will get $10 off the cost of processing orders they receive.

"It's a really smart move by Google, a wonderful way to close the loop with its advertisers," said Charlene Li of Forrester Research.

But she pointed out that since Google would be hanging onto information about customers, large retailers might be reluctant to give up the chance of getting valuable marketing information.

And others said that Paypal's position was strong enough to resist the Google onslaught.

"It's not going to kill Paypal," said Greg Sterling of Sterling Market Intelligence, saying that there was room in a market long dominated by Paypal for several such services.

Source: http://news.bbc.co.uk/1/hi/business/5128126.stm

Date - 29 June 2006

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