Google unveils online payment system

Ending more than a year of speculation and rumours, Google Inc. unveiled on Thursday its much-awaited online payments system, likely surprising many because its reach will extend farther than previously thought.

The system, called Google Checkout, not Gbuy as some reports have suggested, will launch in final form rather than as a typical Google “beta” offering. It will not be circumscribed to Google advertisers, although participants in Google’s AdWords program will have some advantages.

“This is a very big deal. This is an entire transaction ecosystem,” said Gartner Inc. analyst Allen Weiner. “This is one of Google’s most important deals in a long time.”

In a nutshell, Google Checkout has been designed to simplify and streamline business-to-consumer e-commerce transactions by letting buyers store their purchasing information with Google. That way, users can store contact details, payment preferences and shipping information once, instead of having to enter that information separately with multiple merchants.

Google Checkout supports a variety of payment methods, including credit cards from Visa International Inc., MasterCard International Inc., American Express Co. and Discover Bank. Meanwhile, Citibank cardholders who enroll in Google Checkout and make at least one purchase before Sept. 15 will receive either a credit on their statement, cash back or reward-program points.

Google Checkout also provides shoppers with a purchasing history and reimburses them for unauthorized purchases.

Beyond the convenience for shoppers, Google Checkout will take advantage of, and potentially boost, Google’s search and advertising services.

Merchants who participate in the program and also advertise on AdWords will have their ads run with a Google Checkout icon. These merchants will be able to process for free a sales amount equal to 10 times the amount they spend on AdWords advertising.

Thus, Google Checkout can potentially help Google grow its advertiser base. It also enhances the search services by adding a transaction-processing feature to searches centered on product purchases.

The program will not be limited to AdWords advertisers. Those non-AdWords merchants will be charged a flat fee for all transactions.

Google will offer several ways for merchants to integrate their Web sites with Google Checkout. At the simplest level, a company can include Checkout “buy” buttons by pasting HTML code into their Web pages. For more sophisticated integrations, Google will offer a Google Checkout application programming interface (API).

It had previously been suggested that Google Checkout would directly rival eBay Inc.’s PayPal, but the Google service has a broader scope, Weiner said. “PayPal lacks Google’s search mechanism and the advertising platform. This goes to the things PayPal doesn’t offer,” Weiner said.

In fact, PayPal could, in theory, be a payment option within the Google Checkout platform, said Salar Kamangar, a Google vice president of product management.

“This is about a checkout process. We’re not trying to create a new payment method or change way payments work on the Web,” he said.

In fact, Google has provided eBay with information about Google Checkout, although there is nothing to announce at this time about any integration efforts with PayPal, Kamangar said.

For Google, this new system opens a potentially solid and recurring revenue stream that isn’t dependent on advertising but rather on e-commerce transactions, Weiner said.

This should be music to the ears of investors and financial analysts, many of whom worry about Google’s overwhelming reliance on paid-search advertising, Weiner said.

For the service to succeed, Google will have to build trust among consumers as a provider of financial transactions, Weiner said. A big boost towards this end is the partnership with Citibank, he said.

More information about Google Checkout can be obtained at this Web site.

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