[updated] Google to start new payment system

Post by **Tami** » Sun Jun 19, 2005 6:51 pm

Google To Start New Payment System
Associated Press

MOUNTAIN VIEW, Calif. — Online search-engine leader Google Inc. is preparing to introduce an electronic payment system later this year in a move that would pose a financial threat to one of its biggest advertisers, Internet auctioneer EBay Inc.

The Wall Street Journal reported Google's plans on its website late Friday, citing sources familiar with the Mountain View-based company's plans. The Journal did not provide any details about Google's strategy.

A Google spokesman declined to comment on the report.

The likelihood of Google rolling out an online payment system to rival EBay's popular PayPal service became a hot topic during an Internet conference hosted Thursday by Piper Jaffray.

"It could be a pretty big negative for EBay if it happens," said Piper Jaffray analyst Safa Rashtchy, who follows Google as well as the Web's leading auction site.

PayPal accounted for $233.1 million, or 23 percent, of EBay's revenue during the first quarter.

San Jose-based EBay bought PayPal for $1.3 billion in 2002. The payment service makes money by collecting a fee from the transactions that it helps complete. The electronic accounts are funded by credit cards or banking account transfers.

Expanding into online payments might make Google less dependent on advertising, which accounted for nearly all of its first-quarter revenue of $1.26 billion. The merchants who run auctions on EBay are major buyers of Google's ads, which appear alongside search results.

source: [url=\"http://www.ctv.ca\"]CTV news[/url]

Adrasteia · Post by **Adrasteia** » Sun Jun 19, 2005 7:25 pm

lets hope they introduce a much better system than paypa, does...i'll definitely want to look into it if they do offer one.....while paypal may seem great on the surface, the risks it poses to me and the business i complete online are just too high.
nem

Endo · Post by **Endo** » Mon Jun 20, 2005 4:16 am

I think its a good move for google, providing it all works out. Paypal really does lack competition; it gets alot of its trust from ebay. I think if google offer a service like it, it will be trusted like that *clicks his fingers* because its a very trusted name..*waits for MS's turn*

Post by **Tami** » Mon Jun 20, 2005 7:13 am

I dunno, I've not had any problems with PayPal thus far, so Google would have to really prove itself before I would be inclined to switch. I may be a bit biased because of the way Google handles its AdSense policies (multitudes of changes which benefit only Google) and its constant changing of payment policies.

Post by **Tami** » Wed Jun 22, 2005 5:07 am

Google CEO confirms online payment system
Reuters

Web search leader Google is developing an online payment system but not a direct rival to eBay's PayPal, Google Chief Executive Eric Schmidt said Tuesday.

Schmidt spoke after several days of heated speculation over reports that Google was working on a potential rival to PayPal, eBay's popular online payment system.

Schmidt said Google does not intend to offer a "person-to-person stored-value payments system" like PayPal's, in which money briefly resides in PayPal's control during the transaction, but he did not give details of how the Google system would differ.

"The payment services we are working on are a natural evolution of Google's existing online products and advertising programs, which today connect millions of consumers and advertisers," Schmidt told Reuters in a brief telephone interview in which he declined to elaborate.

"We believe that e-commerce can be improved and we are working on ways to improve the user experience," Schmidt said.

The company declined to say when a product would be available.

By avoiding PayPal's model, Google may also bypass a replay of the regulatory battles that were among the thorniest obstacles PayPal faced in its early days as an independent company. The biggest issue was PayPal's plan to briefly hold money on account, generally a bank function, and the saga was chronicled in a book called "The PayPal Wars."

Google currently accepts payments from advertisers and sends money to participants in its AdSense program, which pays Web publishers when Google ads are displayed on their sites.

Google advertisers pay each time a Web surfer clicks on an ad that is generated through the company's AdWords program.

In March, Google said it began testing a third-party electronic funds transfer service to send payments to Web sites that carry Google ads.

The Web search darling recently launched a video search service, which will sell content. The company also operates a price-comparison shopping engine called Froogle, which analysts think could one day become the heart of a full-fledged e-commerce system.

For its part, eBay has been working to expand PayPal's reach beyond its online marketplace and has signed up a variety of retailers including Apple Computer's iTunes service that sells individual songs for 99 cents each.

Analysts on Monday said the biggest and most immediate risk to PayPal from a Google payment system would be a cap on growth in PayPal's off-eBay business, prompting a 2 percent drop in eBay shares.

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