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Google Businesses The Almighty Buck The Internet

PayPal vs Google(Buy) 242

Posted by Hemos from the everyone-knew-it-was-coming-eric dept.
pc-facile.com writes "While Google Chief Executive Eric Schmidt confirmed in press accounts 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..." There's also a more in depth WSJ article about the service.
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PayPal vs Google(Buy) More

PayPal vs Google(Buy)

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  • Why Bite the Hand that Feeds? (Score:5, Interesting)

    by mfh ( 56 ) on Monday February 06, 2006 @11:20AM (#14650701) Homepage Journal
    How can Google create an online payment system without competing with PayPal? Google doesn't want to piss off eBay, because eBay is one of Google's largest advertisers -- so I completely understand why Google would say that they won't compete directly against PayPal -- I get it. Never bite the hand that feeds. (great NiN tune [songmeanings.net]!)

    But what I don't understand is the resulting system... what could it possibly consist of if it can't compete against PayPal? Perhaps they will use PayPal's services within the scope of the new system and defer customers to PayPal for the actual transactions? Partnerships happen when companies fear retaliation or when companies see greater profits by working together, and I think it's possible that is what's going on, in this case. Either that or we'll be seeing a very crippled new system from Google.

    • Re:Why Bite the Hand that Feeds? (Score:4, Funny)

      by LiquidCoooled ( 634315 ) on Monday February 06, 2006 @11:23AM (#14650730) Homepage Journal
      It could be some form of micropayments transactional system.
      They certainly have the capacity and hold enough information about each of us in the magical cookie.

      Pay per click brought to life.

      I'm sorry, this link is not available. Please ensure your paypal account is topped up

    • Re:Why Bite the Hand that Feeds? (Score:5, Interesting)

      by stinerman ( 812158 ) on Monday February 06, 2006 @11:23AM (#14650736)
      Google mighn't want to piss of eBay, but someone has to provide an alternative to PayPal sooner or later, and it might as well be them. I can recall quite a few times that sellers lost a sale to me because they only accepted PayPal. If there was a viable alternative with a sane TOS, perhaps I'd use it. Until then, I'm stuck ordering from merchants who take credit/debit card orders.
      • I know there are tons of horror stories about paypal, but the silent and vast majority enjoy the service.

        Also, you do not need to get a paypal account to pay for an item over paypal using a regular old credit card -- and then only the credit card TOS is relevant to you. So he didn't lose a sale because he has a paypal account, he lost a sale because of your ideology.

        And really, boycotts rarely affect anyone but the boycotters.

        • Re:I digs the paypal (Score:3, Informative)

          by Kadin2048 ( 468275 )
          You don't need to have a PayPal account to send a credit card payment, you're correct.

          What finially got to me was that in order to receive a credit card payment, they force you to upgrade your account to their "Premier" level, which then skims a percentage off of all your incoming transactions (I think it's 3%), regardless of whether or not they're credit-card based.

          For someone who only does a small percentage of credit-card business, this is a real scam. I know that the credit card companies charge fees. I
          • Ok, but those are seller concerns, not buyer concerns. Buyers pay nothing. And if the seller is ok with those terms, that's his problem. Personally - as an occasional seller - I find paypal's terms and fees acceptable for the convienience they provide. I realize that credit card transactions are expensive. Even non credit card transactions (their directly-out-of-checking payment mechanism) have costs associated with them, you shouldn't expect that to be free either (eventhough it is on non-premier acco
        • I once had a buyer who was an ideolog concerning paypal, but he also wanted it shipped ASAP. He suggested wiring the money and I was like NOO I'm not giving you my bank info, you can either paypal or western union wire it to me. After getting hit with a huge fee from Western Union he said.. maybe I should reconsider this paypal thing :)

      • Re:Why Bite the Hand that Feeds? (Score:4, Interesting)

        by Rude Turnip ( 49495 ) <valuation AT gmail DOT com> on Monday February 06, 2006 @12:29PM (#14651248)
        "If there was a viable alternative with a sane TOS, perhaps I'd use it. Until then, I'm stuck ordering from merchants who take credit/debit card orders."

        On a similar rant, I generally won't do business with anyone on eBay who doesn't explicitly say that they will accept US Postal Money Orders. Personally, I prefer to use Paypal, but accepting USPS money orders is the gold standard for any merchant in my book. Why? In my book, anyone that won't accept such money orders is a potential fraudster, afraid of the law. If anyone screws around with a transaction that involves a USPS MO, it turns into a mail fraud case.
      • The sad thing is paypal is worse for the seller than the buyer... I remember selling a computer on ebay a while back... Paypal garnered 70 in fees for the transaction... That coupled with ebay's 4% final value fee (or whatever it is), is making ebay less and less of a viable medium to sell things...
      • You can accept debit/credit cards with paypal. You have to sign up for the service, and there's a fee (I think about 3% of each transaction and a currency conversion fee). The problem is that once you sign up they also charge you a fee for person-to-person payments that were previously free. The benefit of using paypal for credit card payments is that you have to agree to the amount that is charged before the transaction goes through. That's the way it should be with all credit card transactions rather

    • Re:Why Bite the Hand that Feeds? (Score:5, Interesting)

      by HugePedlar ( 900427 ) on Monday February 06, 2006 @11:30AM (#14650788) Homepage
      I got quite excited about the concept of micropayments a few years back. If I could sell stuff (software, music, videos, etc.) for £0.10 per download I might get rich. Maybe not, but the idea is cool.

      Unfortunately, even if Paypal weren't the evil beast people proclaim it to be, it has still stifled the online payment market through its outragous fees for transactions. Payments of less than £1.00 are worthless.

      If Google can provide a viable model for micropayments it could take over a different sector of the market by catering to the smaller purchasers.

      Of course, I'd be just as happy if Google pounded Paypal into the dirt.

      • Re:Why Bite the Hand that Feeds? (Score:5, Interesting)

        by NoMoreNicksLeft ( 516230 ) <john.oyler@ c o m c a st.net> on Monday February 06, 2006 @11:43AM (#14650869) Journal
        I remember when paypal was "we'll make our money off the float, totally free for you!". That lasted what, 8 months? Now they fee you to death, police what you can buy and sell, and penalize you whenever they feel like it with absolutely no recourse. I'm trying to set up my own paysite soon, but I can't really use them, and I can't afford a proper merchant account.

        I hope google kicks their ass. Hell, I hope google sets up its own auction site.

        • Re:Why Bite the Hand that Feeds? (Score:5, Informative)

          by squoozer ( 730327 ) on Monday February 06, 2006 @12:00PM (#14651004)

          I have a merchant account and while the fees are lower than PP they are still a total rip off. Perhaps it's cheaper on the US side of the pond but over here in the home country (sorry) if you are shifting less than £5000 worth of stock a month you probably would be better off with PP. Having said that, I think a real merchant account makes a business more professional looking so there are some pay backs.

          I'm going to go back to dreaming about selling £5k worth of stock in a month.

        • Re:Why Bite the Hand that Feeds? (Score:5, Insightful)

          by rockwood ( 141675 ) on Monday February 06, 2006 @12:36PM (#14651300) Homepage Journal
          I hear what you are saying as I feel that I am in the same boat. I have a website where my wife an I sell primitive countr crafts. We're averaging $2000.00 to $3000.00 in gross profits per month, netting about half of that. We are currently using paypal as well, though out largest problem is refunding. Items become out of stock and with the current paypal system the customer is charged immediately upon checkout. That leaves us with estimating S&H and providing refunds when only partial shipments can fulfilled. I feel that this leaves a unprofessional after-taste in the consumers mouth (and wallet). Some previous businesses we've had were good, other not so good, and with previously being divorced, our credit is not stellar. This poor credit holds us back from obtaining a virtual terminal; which would allow us to process CC's after the sale when we know the exact correct amount charge. Out efforts to provide our custoemr with more accurate (and sometimes lower rates) are shot down by our credit. So as it stands the consumer is the one that hurts the most, and becomes a mere inconvenience for us.

          A non-interactive virtual terminal would suit the industry much more. Example: Paypal system current use their (PayPal's) trustworthiness and not the business, since it hides the consumers CC from us. A virtual terminal would need to be approved based on such things as credit ratings to avoid shady business from over-charging or errounously charging customers CC's because with a Virtual terminal we (the business) have the CC # in order to process this.

          What would be more beneficial would be to have a combination of the two - allowing the customer to check-out, provide their personal information and CC information. Then when we've determined tha exact amount to charge, we'd access the limited virtual terminal. Enter the amount to be charged, the customer receives a confirmation email asking them to accept or deny the charges. They accept and we get paid.

          I'm sure this has potential holes in it yet, but the foundation of what it could pave in regards to new doors opening for lower level new businesses, and home based businesses that have concepts that are working, but do not have the credit history to back it up with conventional means.

          For the professionalism alone I'd pay .25 extra per transaction. The demand is there, it's just time until someone with the large bank account can deploy it. Hopefully this will be Google.

          • We are currently using paypal as well, though out largest problem is refunding. Items become out of stock and with the current paypal system the customer is charged immediately upon checkout. That leaves us with estimating S&H and providing refunds when only partial shipments can fulfilled.

            So set up a website that keeps track of inventory in real time. If an item is out of stock, let them know before they check out. Knowing exactly how much you're paying at the time of checkout is a good thing. Once,

        • Re:Why Bite the Hand that Feeds? (Score:5, Informative)

          by adisakp ( 705706 ) on Monday February 06, 2006 @12:45PM (#14651366) Journal
          I remember when paypal was "we'll make our money off the float, totally free for you!". That lasted what, 8 months?

          And they make plenty of money off the float. However, they end up returning it to you -- in exchange for your social security number and other personal details -- if you elect to "invest" in the PayPal money market. They pay something like 4.28% which is the highest paying money market fund available right now. Until now, they charged nothing to you for administrating the account but soon they're going to lop 0.25% off for administration which is still cheap.

          Paypal has obvious costs for credit card transactions but I'd like to see a business account where cash (paypal funds) or check transactions were discounted or free. The limit the personal accounts to the point where they're nearly useless.
        • Now they ... police what you can buy and sell.... I'm trying to set up my own paysite soon, but I can't really use them....

          Do you really think Google will let you sell goat porn through their service?
        • I dunno if gBay would fly with the Paypal/eBay lawyers. Let's not get into the matter of GayPal...

          Joking aside, though, I totally agree. PayPal stole about $1200 from me a few years back. If nothing else, we need something in the micropayment sector. Considering the ad revenue they already get, they probably could operate entirely without fees, provided the CC rates don't become an issue. Account-to-account stuff, at least, should be fine - put $10 in your account, and you've got a hundred 10c paymen

      • Of course, I'd be just as happy if Google pounded Paypal into the dirt.

        As much as my gut reaction is to agree, I think that having two (at least) major players would be better and perhaps lower costs for their services.

    • Re:Why Bite the Hand that Feeds? (Score:5, Interesting)

      by duffbeer703 ( 177751 ) on Monday February 06, 2006 @11:32AM (#14650802)
      I could see Google doing something like a credit union, where people loan out money to other members. Or even something simple like a billpay service.

      Google's MO is exploiting content & social relationships to sell ads. A Google money service would use the same techniques to maximize loan returns or to target ads.

      Think about it, as an advertiser, I could potentially use Google to target results to people with $x in their checking accounts.

    • Re:Why Bite the Hand that Feeds? (Score:5, Insightful)

      by roderickm ( 6912 ) on Monday February 06, 2006 @11:43AM (#14650871)
      One thing Paypal does not do well is micropayments, or payments under $1, but it's something Google does very well. Consider the millions of virtual pennies they daily count for AdSense. (or is it AdCents?!)

      The virtual wallet metaphor has been tried many times with no success, but Google has the clout and expertise to do it. There are thousands of web publishers that want to charge 2c to read a page (NYTimes?) but have no effective means to do so. A micropayment system might even be a necessary prerequisite to a hosted applications model -- some prognosticators are convinced Google will begin selling PCs with a Linux-based OS, hosting applications on a subscription or pay-per-use model. Would you pay 1c every time you opened Google's continuall-improved word processor?

      Also, Google enjoys loads more user trust than Paypal. I've moved over $10,000 through Paypal, but they wouldn't lift a finger to help me when I was the victim of a $500 fraud. There are many stories of unduly locked/suspended accounts and a severe lack of investigatory dur diligence on Paypal's part. If Google brings a "Do No Evil" alternative payment system, you better believe I'll switch.

      Finally, eBay might not like Google developing a competitor to Paypal (assuming it actually will be... RTFA), but eBay's bread and butter is listing and final value fees, not Paypal transaction charges. I'd bet eBay is much more concerned about Google Base than about a payment system. Of course, the combined threat (of Google Base and a Google Payments) is massive.

      roderickm

      • Re:Why Bite the Hand that Feeds? (Score:5, Interesting)

        by thrillseeker ( 518224 ) on Monday February 06, 2006 @12:06PM (#14651055)
        One thing Paypal does not do well is micropayments, or payments under $1, but it's something Google does very well. Consider the millions of virtual pennies they daily count for AdSense. (or is it AdCents?!)

        Exactly. Paypal could eliminate much of the incentive to produce an alternative by simply eliminating the $0.35 charge. The 2.9% is (barely) bearable, but the fixed-price charge eliminates the entire world of micropayments.

        Additionally, when they started charging percentages for both personal accounts, a requirement to deal in any significant amount of money, they made a lot of people's shit lists. Paypal needs to get aggressive about being viewed as cost-effective at all price levels - their relatively high percentage rate and fixed minimal fee causes them to only be attractive to a general audience (which is most of the potential world) for a narrow price range. If a company can't make a profit by skimming a single penny from every online transaction then the problem is internal to the company.

      • Re:Why Bite the Hand that Feeds? (Score:5, Informative)

        by Superfreaker ( 581067 ) on Monday February 06, 2006 @12:10PM (#14651091) Homepage Journal
        The times they are a changin'
        That old MP argument is not going to hold up forever:

        PayPal Announces Micropayment pricing:
        http://www.paypal.com/activate_micropayments_5pct_ plus_5cents_new_account_pricing [paypal.com]

        On August 31st, 2005, PayPal announced new Micropayments rate of 5% + $0.05 per transaction.

        The rate is available now, to U.S. merchants who sell digital content to U.S. customers, when PayPal is the sole payment solution offered to customers for micropayments transactions.

        Merchants who wish to use PayPal's micropayments pricing will need to open a new PayPal account through the account registration link at the bottom of this note.

        Each PayPal account is associated with only one merchant processing rate. That rate determines the fee that's applied to funds received into that account (additional information on PayPal's Standard Fees is available at: http://www.paypal.com/cgi-bin/webscr?cmd=_display- fees-outside [paypal.com] ). For example: if your Premier/Business Account rate for receiving funds is 2.9% + $0.30, using PayPal's 5% + $0.05 micropayments rate would reduce the total transaction fee charged to payments received below the value of $12 (per payment). However, if you accept payments that are greater than $12, you would pay a lower processing charge by accepting the payment into the account set with the 2.9% + $0.30 rate.

        If you wish to leverage PayPal's micropayments pricing, please open a new browser window and paste the link below into the URL field to open your new PayPal account with micropayments pricing of 5% + $0.05.

      • I've moved over $10,000 through Paypal, but they wouldn't lift a finger to help me when I was the victim of a $500 fraud.

        The last straw for me was a little ($50) transaction where the buyer was using fraudulent bank data. Two months later, I got an email from paypal telling me this had happened, which was news to me. So I had the $50 removed from my account. A nuisance, and perhaps unreasonable as they had failed to verify the data; I wasn't given their banking records to check, but it was my fault wh

      • Re:Why Bite the Hand that Feeds? (Score:5, Interesting)

        by TClevenger ( 252206 ) on Monday February 06, 2006 @12:22PM (#14651195)
        Would you pay 1c every time you opened Google's continuall-improved word processor?

        No. I'm happy with OpenOffice, and despite what Microsoft tries to tell us every other year, word processors have not improved substantially since Office 97, and are certainly not worth the $200 or whatever the hell MS is charging nowadays.

        But for services that require work to keep current, such as Google Maps, or hosted apps without a good open-source alternative, I would be happy to pay.

      • One thing Paypal does not do well is micropayments, or payments under $1, but it's something Google does very well. Consider the millions of virtual pennies they daily count for AdSense. (or is it AdCents?!)

        The virtual wallet metaphor has been tried many times with no success, but Google has the clout and expertise to do it.

        Oooooh!, so that is why the actual music shops charge $1 for each song now uh? I hope Google hurry up with its micropayment thing, I am *sure* Music companies will be really glad to cut
      • Would you pay 1c every time you opened Google's continuall-improved word processor?

        In a word, NO.

        Sounds like a way to get nickel and dimed [answers.com] to death.
    • Well, Paypal's specialization is in paying for ebay sales and other person-to-person transactions. They are trying to move into merchant space, but that's not really where their core business is. From what I've read about GBuy, is it's specifically built to be in the merchant space.

      It will most likely be a Paypal/MS Passport/Yahoo Wallet type service where you can shop online but only have to give out your card information to a single company.

    • Google doesn't want to piss off eBay, because eBay is one of Google's largest advertisers

      Google doesn't need eBay, eBay needs Google. And, PayPal wouldn't have anything to worry about if they didn't have so many customer service issues. What would be the reason for people to bail from PayPal? PayPal's service sucks and is over priced. So, maybe it's PayPal that needs to shape up?

      But what I'm wondering is, so Google starts a payment service. Would eBay (who owns PayPal) have to allow sellers / buyers to use

      • so Google starts a payment service. Would eBay (who owns PayPal) have to allow sellers / buyers to use it?

        They definitely would have to let 'em use it - or face sudden competition from all the ebay-wannabes that were suddenly more attractive because of their acceptance of gPay.

      • eBay must know they are on very shakey ground. Setting up an internet auction site isn't difficult, eBay isn't a very friendly site, and it's coupled with the least loved payment system imaginable.

        The only thing that keeps eBay from crashing an buring is that nobody else has the billion war chest needed to undercut them, out-advertise them and otherwise build up a significant userbase... until Google floated.

        eBay simply cannot risk annoying Google by locking out their payment system. All Google has to do is
        • eBay must know they are on very shakey ground. Setting up an internet auction site isn't difficult, eBay isn't a very friendly site, and it's coupled with the least loved payment system imaginable.

          The obvious: Google will develop its own auction site, and combine it with its own payment service, and spin it off into a wholly owned subsidiary which eventually eats eBay and PayPal through a hostile takeover...

    • perhaps (Score:3, Insightful)

      by way2trivial ( 601132 )
      and just perhaps, the relevant bit is "payments from user to user"

      if they have been trial running it with merchants who sell stuff, perhaps they will only take payments from people and to businesses, not multiple individual to individual payments.

      or something akin to microsofts original idea for 'microsoft wallet' where google keeps your cc info private to them, and authorizes payments to individual merchants in aggregate..

      or micropayments tracked by google, billed to you every X days, (or paid in advance)

  • Yes, please. (Score:5, Interesting)

    by jfisherwa ( 323744 ) <jason.fisherNO@SPAMgmail.com> on Monday February 06, 2006 @11:20AM (#14650702) Homepage
    PayPal is top on my list of evil Internet companies. Maybe it's top on Google's as well.
    • But it would merely be trading one evil for another (Google aids in the censoring of the Chinese populace for profit). While Google might be the lesser of the evil, it certainly isn't the holy grail of online transactions that is needed.
      • Paypal = poodle-raping babybutcher evil.

        Google's chinese censorship = shoplifting a candybar evil.

        I'm not usually one to play "choose the lesser of two evils", but most times it's 9.94 to 9.93... this is more like 20 million versus 0.6.

      • Re:Yes, please. (Score:5, Interesting)

        by ionpro ( 34327 ) on Monday February 06, 2006 @11:54AM (#14650954) Homepage
        Google doesn't do anything of the sort. Google.com is provided completely uncensored to Chinese audiences. However, the government disables cached pages, translation, and a few other services. It's also very slow, because it has to go through the firewall. All Google did was provide a point-of-presence inside China for google.cn. They would be shut down for this point of presence if they didn't at least pay lip service to Chinese Internet law. As the silly ways to break the Google filter show (searching in UPPERCASE, adding a period, ...) it's obvious Google is doing as little as possible to ensure the government doesn't shut them down. But people are protesting their so-called human rights violations. It's rediculous, and the only reason people do it is because Google has become big enough that it's cool to bash them.

        Google philosophy is that they can make more money, long-term, by doing no evil. I've yet to see anything from them that shows they've abandoned that philosophy.

      • Re:Yes, please. (Score:5, Insightful)

        by thrillseeker ( 518224 ) on Monday February 06, 2006 @12:20PM (#14651175)
        Google aids in the censoring of the Chinese populace for profit

        Anytime you buy a product that is made is China you have aided the government of China in thier domination of the Chinese people. Are you going to quit buying anything made in China? - good luck with that endeavor.

        While (mostly) all of us would like to see the Chinese people free, it's not gonna happen overnight or simply by us wishing upon a star. It will either happen quickly with war (damn unpleasant affair) or much more slowly with (ever growing) free markets. Every little thing that causes the Chinese people to improve their own standard of living will pressure their government to get more of it - the Chinese government likes being in power because that is where the wealth is in that country. Create a generally higher level of wealth and the country will become a better place, because the people there are far bigger than their government.

    • Re:Yes, please. (Score:4, Interesting)

      by putko ( 753330 ) on Monday February 06, 2006 @11:31AM (#14650794) Homepage Journal
      What is so evil about PayPal?

      I've mostly been struck at how irritating their website is to use. I went through most of the hassle of registering an account, but never finished, because it was just too irritating and long. Way to much reading and clicking.

      Disabling my account when I moved countries was also a huge pain in the ass. In the end I figured it was easier to just never do business with them.

      In the end I decided that I didn't trust their competency enough to give them my card info. I trust Amazon, and Yahoo! Store, but that's about it.

      • Re:Yes, please. (Score:2, Interesting)

        by Anonymous Coward
        See http://www.paypalsucks.com/ [paypalsucks.com]. There's plenty of evidence (news articles etc.) to suggest it isn't just a smear site done by competitors.
      • I've mostly been struck at how irritating their website is to use. I went through most of the hassle of registering an account, but never finished, because it was just too irritating and long. Way to much reading and clicking.

        Fraud prevention. Paypal is the ultimate crime-to-cash gateway. Or at least it used to be. Those hoops you had to jump through are supposed to ward off evildoers. Still, with a little persistence, you can rip off anyone in the world and turn it into cash without ever having to sh

      • Clearly you cannot tell how evil PayPal is if you never used them. In fact, many of their users will never know how evil they are, especially if you only use PayPal to purchase and not to sell.

        I will never, ever, couple my checking account to PayPal, which is what they really want you to do. Pay them with a credit card, and you have some protection. Pay them with a direct debit from your checking account, and you will have no recourse whatsoever, you might as well set fire or flush your money away...

  • Horizontal Expansion (Score:5, Informative)

    by eldavojohn ( 898314 ) * <eldavojohn@noSpAM.gmail.com> on Monday February 06, 2006 @11:21AM (#14650707) Journal
    Since it's IPO on April 30th 2004, Google seems to be testing the waters of a lot of different markets.

    Granted, they all center on information technology, this company is ever expanding along different product lines. We've seen Google blogs, Picasa, Analytics, Video, Desktop, Talk, Earth, Toolbar, Gmail, Translate, Mobile, etc. And (thank god), they've all been presented to us rather benignly but are they all considered successes?

    And now we observe GBuy, a service to compete with Paypal. Paypal's history has been rocky but they do have a solid foothold as they are almost married with eBay. Will eBay welcome the new GBuy and favor it equally with Paypal?

    Google profits around $17 billion a year--do they really need to become a money transfer service? Ebay reports [auctionbytes.com] $4.5 billion a year, will they be sharing some of that with Google? Will a cut of that even matter to Google?

    What's interesting is to see if they actually take a cut (a la Paypal) or if they just continue Google ads through the pages on the service to pay for all of the legal work that comes with claims and fraud. They have the resources to do it and this would probably kill sites like Paypal that take a 3% or more charge on each transaction.
    • If you were a shareholder and your company had the ability to gain a ~5% increase in income (your "is it really worth it?" comment), and possibly more market share, thus increasing the likelyhood of more income from additional exposure. Yea, it's really worth it.

    • Re:Horizontal Expansion (Score:5, Informative)

      by Alex P Keaton in da ( 882660 ) on Monday February 06, 2006 @11:39AM (#14650845) Homepage
      Not to confuse the issue with facts-
      Don't forget that credit card companies charge businesses that take their cards. When you buy gas with your credit card, the credit cards company (mastercard, visa, whatever) charges the gas station to process the payment, sometimes as much as 5 percent. So your statement "What's interesting is to see if they actually take a cut (a la Paypal) or if they just continue Google ads through the pages on the service to pay for all of the legal work that comes with claims and fraud." Ignores the largest expense that PayPal or Potentially GBuy has....
      • At least at places where I get gas, there is an extra $.50 charge for paying at the pump. I think that's how they get money for credit card usage without actually charging an extra fee for credit card use (which would be against ToS).
        • Also, gas stations (Before anyone jumps on me, I said stations, i.e. the guy who owns the corner franchise, not the Oil Company) make very little of their money from gas. (Look it up, them make 2 or 3 cents per gallon) They make their money from cigs, lottery and other convenience items. So they want you to come in... Using the pay at the pump costs them a lot of sales...
          • "They make their money from cigs, lottery and other convenience items. So they want you to come in... Using the pay at the pump costs them a lot of sales..."

            Potential sales. If the station doesn't have pay at the pump I will leave. I suspect others will too. They may not make much but some is better than none. And I sometimes wander in and buy something-from stations with pay at the pump.

    • Re:Horizontal Expansion (Score:2, Informative)

      by Anonymous Coward
      Can you please show me where Google made $17bn in profit in ANY year? No? I didn't think so.

      FYI, their 2004 gross profit (2005 figures having not been released yet) was $1.7bn.
      • From a link in TFA [ftrain.com]:

        While Amazon and Ebay continue to have average quarterly profits of $1 billion and $1.8 billion, respectively, and are successes by any measure, the $17 billion per annum Google Marketplace is clearly the most impressive success story of what used to be called, pre-crash, "The New Economy."

        Perhaps I misread that ... maybe $17 billion is their gross profit? Either way, I said "profit" not "gross profit" or "net profit."

        • no idea what that number refers to, but GOOG only had about $4.1b in revenue (without acccounting for any costs, salaries, etc) through Q3 2005. So your number is incredibly wrong. Whatever the $17b number is, it ain't profit.
    • They are not 'almost married'; EBay OWNS PayPal. Since 2002.
    • Google profits around $17 billion a year--do they really need to become a money transfer service?

      But of course.

      Those who compete, wish to succeed.

      Those who succeed, wish to dominate.

  • Confused (Score:3, Funny)

    by HoosierPeschke ( 887362 ) <hoosierpeschke@comcast.net> on Monday February 06, 2006 @11:21AM (#14650711) Homepage
    Hi, I'm going to create a service similar to yours in the same industry, but I'm not going to directly compete with you.

    If I was PayPal, I wouldn't believe Google either...
    • Hi, I'm going to create a service similar to yours in the same industry, but I'm not going to directly compete with you.

      What if Google ads a "buy this" link to its advertising banners? With a cut of the transaction going to either Google itself, or to the owner of the page (for some targeted stuff) (or to both).

      If they restrict the payment service to their own ad network, you can't really say they are directly competing with PayPal.

  • Can third party transfer survive? (Score:5, Interesting)

    by dada21 ( 163177 ) * <adam.dada@gmail.com> on Monday February 06, 2006 @11:21AM (#14650715) Homepage Journal
    As the banking cartel finds new ways of transfering money "instantly" I wonder if Paypal (and Google Buy) will be able to last without actually becoming licensed and regulated banks themselves. The banking industry has the most collusion (and conspiracy theories) of any industry you'll ever research, and I don't see them just giving up the control of the currency base. Paypal appeared out of the blue (in a bank's reference time) with their services, and it wouldn't surprise me if the banking cartel creates a new standard for money transfers that puts up huge roadblocks for Paypal in the name of "fighting terrorism and money laundering."

    I don't like paper cash, and I definitely don't like digital cash. The banking cartel, on the other hand, worked very hard to separate paper receipts for gold from the actual gold, and then the paper receipts became valuable. Now they've made almost 80% of currency digital already (compare M1 versus M3 money supply figures), and I'm even more hesitant to become part of that system. Paypal has embraced it entirely, but I wonder how quickly they'll be forced out of the business if they don't become part of the system.

    In the end, competition is destroyed, and we the consumer will end up with pretty much what we've always had.

    • Re:Can third party transfer survive? (Score:2, Funny)

      by Anonymous Coward

      I don't like paper cash, and I definitely don't like digital cash.

      Hey, you! Yeah, you in the droopy pants with the pockets full of dubloons!

  • Writes != Copies and Pastes (Score:3, Insightful)

    by richdun ( 672214 ) on Monday February 06, 2006 @11:24AM (#14650739)
    pc-facile.com writes

    Right. It's bad enough with submitters copy and paste from AP or Reuters reports, since that's mostly what the big news sites do anyway, but when you copy and paste someone's blog entry, we're just asking for speculative posts.

    That said, I really wonder if there is much to this. With the Google-Skype deal, you'd think Google and eBay would be getting along better than to have Google launch a service directly competing with another eBay company. But then again, this is Google - how long until you can get "it" on GBay?

  • I _need_ an alternative to Paypal (Score:3, Insightful)

    by RenHoek ( 101570 ) on Monday February 06, 2006 @11:25AM (#14650752) Homepage
    Look, after the various horrendous stories about Paypal (http://www.paypalsucks.com/ [paypalsucks.com]) could we FINALLY get a worldwide viable alternative to Paypal?

    I cancelled my account with Paypal after they decided to freeze the money people were donating for hurrican Katrina on somethingawful.com.

    However I still cannot pay everywhere with a creditcard and to be honest, I'd rather not use my credit card everywhere.

    PLEASE come with an alternative service Google, and one that I can use with my bank in the Netherlands please, since you have worldwide offices anyway.

    Thanks.

    • A bit out of date (Score:5, Insightful)

      by brunes69 ( 86786 ) <`gro.daetsriek' `ta' `todhsals'> on Monday February 06, 2006 @11:40AM (#14650852)
      Most of those stories come before eBay bought Paypal. I use paypal extensively, and also did before the buyout, and I find eBay really cleaned up their act.

      As for the Katrina thing, it was perfectly valid and the right thing to do. Somehtingawful was not a registered charity and thus paypal had no way to differentiate what it was doing with the hundreds of scams going on at the time to defraud people. I actually applaud them for their pro-active approach in dealing with it - they *could* have just done nothing and let the fraudsters get away with it.
      • it was perfectly valid and the right thing to do. Somehtingawful was not a registered charity

        I see - so you'd like to say "thank you Paypal for not letting me decide how to spend my own money"?

        Being a "registered charity" doesn't necessarily mean much charity gets done.

        • If this money was collected saying "Help the Katrina victims", it is not *your* money and you *can't* spend it on whatever you want. That is why (I guess) registered charity must tell government how much money they got and where they spent it. SomethingAwful didn't have to do this. So they could just have used this money to buy a new car, and it wouldn't have been ethical.
          • So registered charities [asu.edu] with 81% overhead are ethical, or the registered ubercharity [rawstory.com] diverting 50% of a targeted donation for 9/11 victims is ethical, but this unregistered charity was deemed in advance to be unethical? PayPal decided where you could (or could not) spend your money for you - and that's ethical?
      • Yeah, and when Paypal refused to give the money directly to the Red Cross? That was awesome.

        If paypal had really believed it was a scam they should have reported it to the police. What they did was they automatically profiled their account as fradulent, froze the account, and intentionally made it difficult to contact support.

  • Paypal vs Google= Users win (Score:4, Insightful)

    by cr0m0 ( 952302 ) on Monday February 06, 2006 @11:25AM (#14650753) Homepage
    Good news for the Internet services users. The more companies competing in the same area, the best prices for the users.

  • Google (Score:5, Funny)

    by propertechdotnet ( 932592 ) on Monday February 06, 2006 @11:26AM (#14650757)
    Google has their hands in everything. If they develop a news site geared towards nerds, it's over.

  • Yet another online credit card service? (Score:4, Interesting)

    by xxxJonBoyxxx ( 565205 ) on Monday February 06, 2006 @11:26AM (#14650758)
    "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."

    I think Google may have a point. If this is simply yet another small-volume, web-based credit card processing thing, then the quasi-online bank features of eBay still make it a unique service.

    I wonder how long until Google's credit card database gets hacked the first time...you know it will be a prime target.

  • Paypal = Ebay (Score:2, Insightful)

    by JDSalinger ( 911918 ) *
    Unless Google can compete with eBay, it is going to massively lag behind PayPal, on account on PayPal's inertia from Ebay business and current use (eBay Paypal ties). The sites that Google links to typically accept Credit Card payments. PayPal, of course, allows such, but is necessary specifically for normal everyday people to accept credit cards (the eBay process). How does Google fit into this?

  • Of course Google will be competing with PayPal, even if their service isn't remotely the same. Google will trust that its name and its success in the global marketplace will draw people to its pay service, draining PayPal in the process.

    Will they be successful? Short-term, yes, long-term, no. It comes down to this: Google is trying to do too much. Rather than expand at a consistant rate and consolidate their power at every step, they seem to be trying to be everywhere at once. Don't let that stock price f

  • good positioning for google (Score:4, Interesting)

    by DeveloperAdvantage ( 923539 ) on Monday February 06, 2006 @11:31AM (#14650797) Homepage
    Google has done a great job positioning themselves between consumers and basically anything they want to purchase. If you think about what a consumer needs to do when they make a purchase, two key steps are first to find something you want and then secondly to pay for it.

    Through their search engine and paid advertising, they basically own Step 1. They act like a gatekeeper, deciding who sees what and really having a tremendous impact on the success of at least some businesses.

    As for the second step of paying for an item, they don't yet have a presence, so this is the logical next step. When their system goes forward, I suspect eventually a little slice of every transaction will go into google's pocket.

    Eventually people will start talking about paying a "google tax". Businesses will need to recover the expense of advertising and the expense of the transaction. Guess who they will recover it from?
    • Eventually people will start talking about paying a "google tax".

      And you are free to own a piece of the ... action [yahoo.com]

    • Eventually people will start talking about paying a "google tax". Businesses will need to recover the expense of advertising and the expense of the transaction. Guess who they will recover it from?

      And that's how payment proccessors work. Whether a merchant uses GBuy, Paypal, Verisign, or deals with Visa/MC/Amex/Disover directly, they all charge money. So unless an e-tailer makes you send cash in the mail, (and then you have the "Post office tax") somebody is paying that fee somewhere.
      Likewise with ad

  • Nothing wrong with healthy competition (Score:3, Insightful)

    by steinnes ( 774991 ) on Monday February 06, 2006 @11:36AM (#14650825) Homepage
    Google is providing good services in most of the areas they've ventured into, PayPal has a rocky history, and most PayPal users have at some point been frustrated by their service. However due to the nature of financial transactions they require a lot of security, and security and service don't always mix well -- at the very least we can say it takes skill to combine the two well. Maybe it's not PayPal's fault that we've been frustrated?

    Hopefully Google's foray into this market will bring us some innovations like micropayments, which we've been awaiting for years -- and although we can only speculate on that, we can all be sure their involvement with payment systems will result in better products for us, whether it be from them, or competitors that are forced to enhance their services. I'm excited.
    • I like the idea, if only because I'm seen a few problems with pay pal, and Google usually knows how to do things right. Their philosophy--which may or may not be intentional--seems to be 'provide users with services they want without pissing them off'. AdSense, Gmail or Google Earth have all followed that mindset, and all of them are pretty good services.

      So, if that is applied to an online payment system it can be nothing but a good thing.

      The problem is that Google hasn't always followed that. Their new

  • Yet more targeting (Score:5, Insightful)

    by mccalli ( 323026 ) on Monday February 06, 2006 @11:36AM (#14650828) Homepage
    Why waste time guessing which ads your readers clicked on and turned into a sale? Now you can measure it directly, as the ad provider is also the point of sale.

    On the other side of the transaction - Google can tell what I've searched for, seen which of those searches actually turned into cash, and push yet more ads at me geared towards exactly what I pay for.

    I hate the idea personally. You'd feel like you were in a shop all of the time you're looking for things on the net - a problem I already feel to some extent. I can see why both the placer of and the seller of an advert would love it however.

    Cheers,
    Ian

    • I hate the idea personally. You'd feel like you were in a shop all of the time you're looking for things on the net - a problem I already feel to some extent.

      Personally, I love the potential results of this. If I'm going to have ads on Web pages, I'd much rather that they were ads for things I might actually buy. What bothers me is the implications of such consolidated power and information gathering. I have a lot of trust in Google due to their culture and history, but I don't trust the company that

  • It's not evil to compete with PayPal. (Score:3, Informative)

    by Theovon ( 109752 ) on Monday February 06, 2006 @11:36AM (#14650834)
    It might be foolish because of their relationship with eBay, but it's not evil. Of all the the things that Google's done lately that some might consider questionable, this isn't one of them.
  • I receive money from Google for my google adds. They've already have the sofware to transfer money from advertiser A to my account. I shouldn't be that complicated to instruct google to substract x amount from that figure and add it to the payment of Alice. Or to substract y ammount from Bob and add it to my payment.

    If you comment on my English, please bear in mind how well you are doing on your third language.
  • Is it possible Eric Schmidt is telling the truth? Maybe they are actually going to only be in the business of securley storing and transmitting credit card info. Maybe going as far as being in the gateway business. Being a merchant of record as is Paypal is a huge step and is most unpleasant. Do they really want to be in the business of chasing down fraudsters and dealing with angry customers over chargebacks? Becoming a bank simply does not fit the mission statement in my view.
    • I agree with your comments. Kind of like how I've read that Wal-Mart wants to become a 'bank' not to lend out money and compete against the MBNAs and BoAs out there, but rather to reduce their credit card charges, to streamline payments, and so forth.

      This also could be a lot of hot air. Fire and Motion [joelonsoftware.com] - it's something that GOOG does quite well, actually.

  • I know what's going on! Google is making a digital bank! It'll be located on the island of Kinakuta in an abandoned Japanese "command center." Quick! Find Goto Dengo!

  • Would pressure on Paypal lead eBay to do more with Paypal to prevent auction fraud?
  • He says he doesn't believe Mr. Schmidt.

    Considering Google's business model, it seems obvious that they payment system will facilitate AdSense and AdWords payments between Google and advertisers, not person to person. Hell, I've got a liberal arts degree and even I can see that.

  • ... and PayPal certainly is not it. To begin with, such a payment system needs to work on a basis where you cannot ever have an account frozen except by court order. A payment system which gives a definitely point of guarantee is also needed, and credit cards certainly don't do that (charges can be reversed for a lengthy period of time). And such a system needs to be available to anyone who can properly identify themselves regardless of things like credit rating (i.e. don't grant credit and you won't nee

    • Well, that's simply a bank payment (from what you write, I see no difference at all), already accessible from any bank's web-service - you get the seller's info, and make a payment.
          Easy to do if you are paying the bill for the month's rent; however, completely useless for things like e-bay - because the buyer is not protected if the item is defective, or not sent at all. You need to trust the seller for this to work.
         
  • On the front page of Slashdot today: "Google and Skype in Startup to Link Hotspots [slashdot.org]" eBay owns Skype and eBay and Google appear to be friendly

    Then there's this story, eBay owns PayPal, eBay and Google don't appear to be too friendly anymore. Complex relationship huh?

  • There is a reason why Ebay is one of the largest advertisers on Google and it isn't because Google doesn't compete with them. So saying Google wont' try and compete with PayPal doesn't make a whole lot of sense. Sure they can try and compete with PayPal. What's Ebay going to do? Cut off thier nose to spite their face?

    Paypal and Ebay aren't loved in as much as they are tolerated, and many ebay hobbiests find their profits significantly eroded by what is now considered excessively high fees and poor term

  • I can't wait until Google eats what's left of your market share. You deserve to lose out -- not just to Google, but any company with enough wit to understand that you can't do these kinds of things with real money and get away with them.

  • Obviously Micropayments (Score:4, Interesting)

    by a2800276 ( 50374 ) on Monday February 06, 2006 @01:51PM (#14652099) Homepage
    I would be really suprised if Google's entry into the payment market wouldn't have to do with micropayments. Why dabble with peer-to-peer aka paypal payments? That market is already cornered.

    Micropayments, on the other hand are really that big a technical challenge. All previous schemes have failed because of the chicken/egg problem. If they don't have enough users signed up, not content providers will signon and vice versa.

    Google already has a gigantic video service which is a great initial content provider. Apart from that, hundreds of website operators will sign on immediately because they've been successful in the past.

    As for users signing up, they've only got to get a few % of the millions of gmail users to type in a credit card number, or they could let the billions of "webmasters", who've got google ads on their pages but never make it to the minimum payout, spend their click-money on micropayments.

    -tim

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