Google has unveiled an online payment system that will let consumers store credit-card information and use their Google account to purchase products on the web.

Published: 29 Jun 2006

Google has unveiled an online payment system that will let consumers store credit-card information and use their Google account to purchase products on the web.

The new service, Google Checkout, holds consumers’ credit card numbers and account information for a “one-click” shopping experience at participating retailers.

Google Checkout will be offered on web sites of companies including Buy.com Inc, Starbucks Corp and Levi Strauss & Co, Google vice president – product management Salar Kamangar reportedly said.

Google is making payment processing free to companies that spend enough on its AdWords advertising. For every $1 merchants spend on ads, they’ll be able to process $10 of sales through Google Checkout for free, Kamangar reportedly said.

According to Google, Checkout will offer customers a higher level of security by masking credit card information from the store, and in fact be able to offer customers reimbursements for purchases that were not authorised.

“If shoppers want to use Google Checkout, they can create a Google Checkout login right from the merchant's site with a single username and password by entering basic information, such as their contact details, payment preferences, and shipping information, once. Then, when checking out at any store that offers Google Checkout, they can simply select Google Checkout, quickly complete their transaction with their login information, and avoid the hassle of filling out multiple forms. In addition, shoppers can keep track of their purchase history, including orders and shipping details, in one place,” stated a release.

According to analysts, the initiative sparks new competition for EBay Inc’s PayPal, which also offers payment processing for online shopping sites.

On his part, Google’s chief executive, Eric E. Schmidt, argued that the upcoming service would not compete directly with PayPal because it will be more focused on advertisers than consumers; eBay, which owns PayPal, is a major advertising customer of Google.

According to Washington Post, Philip Remek, an analyst at institutional stock brokerage Guzman & Co. who follows both companies, said it could take Google years to catch up to PayPal, which he said handles more than $20 billion in transactions in 50 countries. “Predictions about the death of PayPal are greatly exaggerated,” Remek said. “Google may be able to carve out a certain fraction of the market for itself, but I do not see it supplanting PayPal.”

According to media, Google will charge merchants a fee of 2pc of the purchase amount plus 20 cents (11p) per transaction. PayPal’s processing fees are between 1.9pc and 2.9pc of the purchase amount plus 30 cents per transaction.

A spokesman for eBay reportedly said it would not rule out using Checkout on its website in addition to PayPal. Google declined to comment on if it will now launch an auction site to rival eBay.