Google Checkout: A Gateway Service?

    December 6, 2006

Earlier this year, Google extended an offer to merchants to take advantage of Google Checkout services for free until the end of the year, a gesture that rival PayPal matched in kind. Tuesday, the company officially extended the offer of free services until December 31, 2007.

The move is surely aimed at positioning Google Checkout as a more universally accepted alternative to PayPal as an online payment processor. By extending free processing until the end of 2007, Google hopes that more merchants will take advantage of the service, and by extension, other Google services such as AdSense.

Along with the extension of free payment processing, Google also announced the following new features that have been implemented into the Checkout service:

Easy coupon creation: Create coupons from the Google Checkout Merchant Center. You can specify $-off discounts and %-off discounts, and add restrictions such as “one per customer,” “new customers only,” and so on. Try it now (requires a Checkout merchant account).

Email invoicing: Bill customers for purchases by sending them a Google Checkout invoice over email. The email will contain a link that your customers can click on to pay you via Google Checkout. Try it now (requires a Checkout merchant account).

Simple website integration: With the HTML API, integrating Google Checkout with your shopping cart is easier than ever. Simply add an HTML form to your website and use it to send us your shopping carts. Learn more in the new Developer’s Guide.

Steve Bryant at Google Watch had this to say about the announcement:

“Google’s promotion will put pressure on eBay. PayPal matched the free Checkout offer when it was first announced, but that promotion ended in November. PayPal charges 2.9 percent plus 30 cents per transaction on sales up to $3,000 a month.

Basically, Google has a greater incentive to drop fees: It’ll make up losses through advertiser volume. Plus once you’re in the Google system, you’re more likely to use other Google services.”

What other Google services might a merchant likely use? Let’s take a look at Google’s official statement concerning free checkout and see for ourselves:

As you may know, for every $1 you spend on AdWords, you can process $10 of Google Checkout sales for free. Just in time for the holidays, we’re giving you even more by processing your Google Checkout sales for free through the end of 2007! Here’s how it works:

•   From November 8, 2006 through December 31, 2007, we’ll process your Checkout transactions for free, even if you aren’t an AdWords advertiser. If you’re already an AdWords advertiser, we’ll process your Checkout transactions for free regardless of what you spend on AdWords.

•   Valid Checkout orders you receive during the promotion will automatically qualify.

•   You can take full advantage of this promotion by encouraging your buyers to use Google Checkout on your site.

•   Other applicable fees (e.g. chargeback fees) may apply. This promotion is subject to the Google Checkout Terms of Service. Google may revoke the promotion for accounts that do not comply with these terms.

AdWords is mentioned four times in the first two paragraphs, so it seems that Google is trying to leverage the service as a “gateway” of sorts, using it to clue merchants in on other products that the company has to offer.

However, Google hasn’t totally convinced the community that this is a good move. A commenter at Threadwatch notes, “Sounds a little desperate to me. Need to become popular to be profitable. I don’t think the adoption rate has been as high as Google has hoped.”

There are also affiliate concerns, noted by a poster in a Webmaster World thread:

Is everyone also aware that Google Checkout is washing affiliate links/tracking and not tracking those that are tracked with cookies, so that affiliates won’t get paid for sales made by customers they send to merchants using Google Checkout?

So while optimists view the move as a merchant springboard to other Google services, skeptics see the announcement as more of an act of desperation rather than a calculated business move. The issue of affiliate payments still leaves much room for speculation and debate as well.

So, it still remains unclear whether or not free payment processing will entice merchants to stroll down the Google Checkout aisle.

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Joe is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.