Who Will Process Your Online Purchases?

“We respect their entry and stand ready to compete,” Jeff Jordan stated. He noted that PayPal has had many competitors in the past, and has weathered those challengers well enough. There are currently about 105 million user accounts with the company, which represents a 47 percent increase from the same period last year. And PayPal’s total payment volume is up 41 percent for the same timespan, to its current level of $8.8 billion.

Google’s GBuy may undercut the current champion, though, at least in terms of pricing. The average transaction price to sellers on PayPal is 3.5 percent. GBuy is expected to be completely free for an initial period, and eventually charge 1.5 percent to 2 percent. This is according to Rohan, the same person who gained knowledge of the release date.

Rohan also said that GBuy is going to concentrate only on consumer-to-merchant transactions as it is launched. But he notes that it could be expanded to include consumer-to-consumer transactions at some point in the future.

PayPal’s CEO remained unconcerned. “We think we’re pretty good at it and have a pretty strong lead,” he said, referring to online payment services. PayPal was founded in December of 1998, and eBay’s use of it has made it the dominant leader in the market. GBuy could change that, however.

Add to | DiggThis | Yahoo! My Web

Technorati:

Doug is a staff writer for WebProNews. Visit WebProNews for the latest eBusiness news.

GBuy is due to be released on June 28. It will take users off merchants’ sites in order to complete payment, which will allow the search engine giant to gather e-commerce data. This could, in turn, drive more precise searches.

“If harnessed, the precision of this targeting could be revolutionary,” RBC analyst Jordan Rohan wrote. He also thinks Google’s plan to designate “trusted GBuy merchants” in its search results may help build a consumer base and generate sales. The label would (in theory) mark safe and secure sellers.

Rohan believes GBuy merchants would benefit from increased click-through rates in another way, as well. Assuming Google’s search algoritithms are influenced by that rate, GBuy merchants might see higher rankings. Some companies may fear that the transaction data will lead Google to charge more for sponsored links in the future, however.

Google has said it will not charge merchants for its payment service for an unspecified period of time. After the beta phase passes, GBuy will probably charge 1.5% to 2%, which is roughly in line with the fees of PayPal, an established provider.

Many people view GBuy as a competitor with PayPal’s recent “off-eBay” intiative. “Short term, GBuy is more negative for eBay than it is positive for Google,” Rohan said. “Longer-term, it could be a game-changer.” It seems like RBC Capital Markets is favoring that possibility.

Add to | DiggThis | Yahoo! My Web

Technorati:

Doug is a staff writer for WebProNews. Visit WebProNews for the latest eBusiness news.

For buyers, this feature will provide a convenient and secure way to purchase Google Base items by credit card. For sellers, this feature integrates transaction processing with Google Base item management…we’re starting with a very small number of sellers and we expect to include more over the next several months.

That trembling you feel – no, a T-rex is not about to swallow you up – it’s the sound of eBay and PayPal quaking in their boots.

Hey, if nothing else, it gives email phishers another opportunity to let us know we need to “confirm our username and passwords”.

Andy Beal is an internet marketing consultant and considered one of the world’s most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.

Once again, rumors are racing that Google will soon deploy a stored payment system. Last Monday, the Wall Street Journal reported that Google has been quietly beta-testing a stored-payment system (dubbed “GBuy”) for the past nine months. This story reignited speculation that first surfaced in the Spring of 2005 concerning what was then known as “Google Wallet,” a product which Google at the time denied would compete directly with PayPal, the dominant stored-payment system in use today.

The WSJ story focused narrowly on the competitive threat that a Google stored-payment system would pose to eBay, which owns PayPal, but the more relevant question for search marketers is: what would having a PayPal-like system do for Google?

GBuy: The Google Seal of Approval?

The WSJ article stated that “GBuy will feature an icon posted alongside the paid-search ads of merchants, which Google hopes will tempt consumers to click on the ads.”

What’s the big deal about advertisers displaying a GBuy icon? Well, a couple of things: displaying this icon will convey to the searcher two important facts: first, that an electronic transaction for the advertised good or service can be immediately effected (a sure lure for those searchers seeking immediate gratification), and second, that the advertiser is not a fly-by-night vendor from Polookaville, but one whose credit is good enough (a least with Google) to warrant the display of the GBuy icon. In effect, the GBuy icon will function as a stamp validating a given advertiser’s fitness to do business on Google.

Consequently, it is likely that click-through rates for such ads will outperform non-GBuy ads. The result will be an avalanche of advertiser opt-ins to the program. At the same time, curious searchers clicking on ads with the GBuy icon who lack GBuy accounts can be intercepted and politely recruited into the GBuy program before continuing on to landing pages.

Google has a long way to go before it can catch eBay’s PayPal, which has almost 100 million user accounts. But by coupling the power of search to a stored payment system, Google might be able to recruit a critical mass of users quickly, and GBuy could, over the period of just a few months, become a formidable competitor.

Pay-Per View Content

Presently, Google makes more than 99 percent of its revenues by serving up PPC ads, but increased competition from the other engines, along with pressure from Wall Street, are forcing it to diversify its revenue streams, and serving up pay-per-view video content is something it’s already doing.

Although Google’s video store (video.google.com) had a rocky launch, especially because Google’s DRM (Digital Rights Management) software prevents some videos from being transferred to iPods and other portable devices, it has already improved and stands to get better as Google works out the bugs.

Unlike Apple’s iTunes – the dominant video downloading service today — Google’s video site isn’t just a one-way, fixed-price downloading service, but a two-way system designed to serve as a foundation for a genuine video marketplace. For such a market to take hold, a critical mass of video inventory needs to be built, and one easy way for Google to build a large inventory of videos would be to reward video uploaders with “credits” that could be applied to premium downloads. And a stored-payment system would be essential for such a system to work.

EBay also has an incentive to go into the stored-payment model with PayPal. Currently most user of PayPal probably don’t carry a positive balance and therefore a micropayments system is not feasible due to the electronic funds transfer costs and credit card merchant fee costs for small transactions. However, it wouldn’t be hard for PayPal to require a minimum balance of $20 in exchange for the ability to buy content oneBay.

Microsoft’s Passport was probably a generation too early and had some security flaws that derailed wider acceptance. However, if the micro-payments and pay-per-view content business heats up again, Microsoft may not be out of the running.

Adwords-Adsense Integration

Adwords (Google’s platform for PPC advertising) and Adsense (its partner network for running such ads) are already linked through Google’s back-end, which tracks the ads’ performance and calculates payments to the publishers. Unfortunately, the process for paying Adsense program publishers is needlessly clunky: once each month, thousands of checks must be cut and mailed to the publishers, a needless cost that doesn’t make sense for a digital-age company like Google serving hundreds of thousands of publishers. Automating these payouts via a stored-payment system would save costs.

Pay-Per-Search?

This week, Microsoft launched a service called “MSN Search and Win” (msnsearchandwin.com/) which entices users to perform searches on 1,200 pre-identified keywords in hope of winning prizes ranging from flat-screen TVs to charity donations. iWon.com, a division of IAC, pioneered rewarding searchers with prizes, and Amazon already offers users of its A9 search engine small discounts to purchases on Amazon.com. Yahoo is reportedly testing the pay-per-search waters by polling its users on whether to offer freebies in exchange for their making Yahoo their primary search engine.

Google has made no indication that it will offer a rewards program, but if other search engines follow MSN’s examples, it may be forced to follow suit. A stored-payment system would let Google offer “Google points” or even “Google Cash” that could be applicable to the purchase of online or offline goods.

When Will It Happen?

Getting into the stored-payment business is a big step for Google, and one not to be taken lightly. PayPal, the stored-payment leader, has been the target of attacks by fraudsters, phishers, and identity thieves, and narrowly avoided being regulated by the FDIC in 2002. Still, there are so many advantages for Google that it is practically inevitable that Google will launch such a product.

When will it happen? Mr. Frog doesn’t have a crystal ball, but he’s willing to lay even odds that Google will begin a limited public test of its stored-payment system by the end of the second quarter of 2006, just in time for the 2006 holiday season.

Mr. Frog is a leading Search industry visionary. Mr. Frog is a member of the Did-it Search Marketing team which accompanies him to most major
marketing conferences.

Google Sets Their Sites Towards PayPal

PayPal delivered nearly a quarter of eBay’s most recent quarterly revenue of $1.3 billion, the Wall Street Journal said in a report today.

That PayPal revenue may look like a big jar of chocolate chips to the Cookie Monsters at Google. Their rival system, called GBuy, has been getting a workout since the early part of 2005. The Journal cited a source briefed on the service:

Storing payment information has been an ease-of-use feature and strength of PayPal. Google has enough brand recognition to get a lot of attention. The Journal’s report seems to suggest the way Google will get users on board will be through its GBuy retailers. But will eBay accept GBuy as a payment method? Probably, as long as eBay gets its cuts of a sale as is customary.

The GBuy.com domain returns a “page not found” error when tested, so whatever Google has on tap isn’t readily available yet. The domain has been registered to the Burbank, CA, firm Trout & Zimmer. SearchEngineWatch noted in September 2005 how the domain gcalendar.com was transferred from Trout & Zimmer to Data Docket Inc, a firm well known for registering domain names with Google as part of the name.

Google, as per usual, had no comment on any pending products, the Journal said.

—

Drag this to your Bookmarks.

Add to | DiggThis | Yahoo My Web

David Utter is a staff writer for WebProNews covering technology and business.