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Google Checkout, Google’s online payment system, is extending its free processing until February 1, 2008.

The promotion was going to end on December 31, 2007. If you’re a Google Adwords customer for every dollar you spend on AdWords, you can process $10 of sales with Google Checkout for free. After that you’ll be charged 2.0% plus $0.20 per transaction no matter what credit card is used. There are no monthly, setup, or gateway fees.

You must link your AdWords account with Checkout to earn free transaction processing. If you add the link by February, 2008, your AdWords spend from January will count towards free processing in February.

Your Checkout and AdWords accounts must be based on the same currency in order to be linked. One nice feature of Checkout is that the fees, when they are charged, are straightforward. PayPal fees depend on your account type, your monthly sales, and whether the buyer is sending money from a bank account or credit card.

Google Checkout is gaining on Paypal when it comes to the top 200 largest online merchants (barely).

Both Paypal and Google Checkout have holiday promotions running. Better hurry though, time is running out.

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