Checking Out Google's CheckOut--New "PayPal "or Poor Imitation?
Written: Jul 09 '06 (Updated Mar 19 '09)
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Pros: Lower Fees, AdWords discounts for sellers; right now, PayPal's a better choice for buyers.
Cons: Buyers must have US address; won't work with Ebay; money transferred only from credit card.
The Bottom Line: Retailers should definitely add Google Checkout, as an addition or replacement for PayPal. Buyers should sign up for the free service and give the $10 off $20 purchase a try.
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| frazzledspice's Full Review: Google Checkout |
April, 2009 update for sellers: As of April, Google Checkout will no longer offer AdWords discounts to Google Checkout merchants. The fees for Google Checkout merchants have also been slightly intcreased.
Checkout, the new online payment system Google premiered last week, has been heralded in a June 27 Wall Street Journal article as a potential threat to PayPal's market dominance.
And, in a preemptive strike against the search engine giant's move, Ebay, PayPal's owner, banned Google Checkout from the site because they were still "testing the software." They are also trying to lure non-Ebay sellers to PayPal by offering bonuses of up to $1,000 to people who get new sellers to sign up with PayPal.
Although Google clearly has the resources and technical know-how to duplicate all the functions PayPal users enjoy today, Google Checkout debuted with only a fraction of the services PayPal offers.
What Google Checkout Offers Buyers Today
As of July 8, 2006, only 80 stores are listed with Google Checkout. Potential customers searching Google for shopping information will see little greeen shopping carts next to these merchants' names in the search engine.
About the biggest online stores currently accepting Google Checkout are Buy.com, SportsAuthority.com, and ECost.com
Twenty-four of these eighty stores are offering an introductory special--$10 off a $20 or more purchase using Google Checkout. I decided to make a purchase through CDUniverse.com using Google Checkout.
Two innovative improvements in the normal purchase process are available with Google.com:
- as soon as you click the "Google Checkout" button, all of your information, including billing, shipping, and payment information, come up on the screen immediately. Checkout is fast and easy.
- Google Checkout tracks all your purchases for you in its system.
To sign up for Google Checkout, you must have a Google Account. After registering for Google, you can add Checkout by submitting your credit card information (credit card "checkcards" are acceptable, also) and responding to the confirmation e-mail. Your credit card information and e-mail address is not shared with the merchant to protect buyers from spam.
At the moment, PayPal has many clear advantages for buyers over Google Checkout.
- Google Checkout customers need to have a U.S. address; PayPal is an international system used in 55 different countries.
- PayPal allows customers to send and receive money from individuals, as gifts or informal cash transactions.
- Customers can't pay for Ebay purchases using Google Checkout.
- PayPal generally debits a customer's checking account when purchases are made, with credit cards as a backup. Google Checkout will only charge credit cards for purchases.
- PayPal customers can hold money in their PayPal accounts, where it earns 4.82% interest currently. (That's almost a half a percent more than what ING Direct is currently paying on money market accounts.)
- PayPal has a $1000 buyer protection program. As Google begins to deal with smaller merchants it would be wise for them to add something similar.
For computer, electronics, and appliance purchases, I think that buyers would be foolish to use either Google Checkout or PayPal. If they use a platinum credit card they can double their warranties and protect their purchase against theft or loss (provided they register the item or keep the receipt and warranty booklet in a home file.) Similarly, purchasing airfare via credit card gives you flight insurance (and some protection against the possibility of airlines that are in bankruptcy from going under before you fly.) I would only use Google Checkout or PayPal if those other factors weren't in play.
What Google Checkout Offers Sellers Today
I am not an online retailer (although I have sold a few items through Half.com and Ebay.com.)
Currently, however, Google Checkout offers some clear advantages to sellers.
Retailers who use Google's Ad Words program will receive free Google Checkout processing on up to $10 worth of sales for every $1 they spend on Ad Words. Even very small businesses can take advantage of Ad Words; other than a set up fee, they only pay for clicks. Their ads appear not only on Google but also on sites in their network, including Earthlink, AOL, and Shopping.com. A little green shopping cart will appear on their ad, indicating they accept Google Checkout.
At the moment, Google's fees to retailers are also lower for all but the biggest sellers.
Google's fees are $.20 plus 2% of the purchase price. If refunds are given, Google refunds the 2% to the retailer but keeps the $.20.
PayPal charges $.30 on each purchase, plus 2.9% for businesses with monthly transactions of $3,000 or less, 2.5% for businesses with monthly transactions of $3-10,000, 2.2% for businesses with monthly transactions of $10-$100,000, and 1.9% for businesses with monthly transactions over $100,000.
Google Checkout customers pay through Google Checkout, and the seller's policies, shipping rates, and sales tax information are all incorporated into the Google Checkout site. Customers can still input online coupon codes if the seller has selected that as an option. I am not sure whether checking out at the Google Checkout site would create problems for customers using rebate sites such as Ebates or Upromise.
The last time I shopped with a retailer using PayPal, all of the checkout information was recorded on the merchant site and totaled. At that time I was told I could pay the total fee through a number of choices, including PayPal. When I clicked on PayPal, I was transferred to the PayPal site and agreed to pay the total.
I think that merchants would find the Google Checkout site preferable.
Final Recommendations
For buyers, it's probably worth it to try out Google Checkout for yourself and make a small purchase with the $10 off $20 coupon. It doesn't cost anything to sign up, and they are bound to get bigger and better.
For sellers, there seem to be clear advantages to signing up for Google Checkout. CD Universe, the Google Checkout retailer I purchased from, offers both PayPal and Google Checkout, so you can make the switch or keep both buttons on your site.
Recommended:
Yes
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