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Google Checkout v PayPal - Will There Be a Winner In The Payments War?

It's been almost one year since Google launched its very own payment service, known as Google Checkout. But prior to its arrival, consumers and merchants alike anticipated much more than just another payment service - they foresaw the unleashing of PayPal's biggest rival. Could the search engine giant really bury PayPal, the payment service many of us had come to associate with online transactions? One year later, congruencies and differences in the aims and results of the two services are clearer - as is the direction in which they're heading.

Google Checkout and PayPal certainly see some things eye to eye: both payment services provide a secure way to shop, with policies that refund a consumer's money in case of fraud. However, the two services cater to different needs. Google Checkout was designed to give businesses an easy way to charge for their wares, as well as to ease the hassles of keeping track of multiple online merchant accounts. Thus, above all else, Google Checkout serves as a holding place for credit or debit card information. It allows consumers to log in to a single Google username to shop, while hiding valuable data and e-mail addresses from merchants. And if you're selling something on a web site, you can cut and paste a code that lets visitors shop via Google Checkout - which, in turn, takes a small cut of your sales. The appeal of Google Checkout is its simplicity, along with having a single interface across multiple stores.

PayPal, on the other hand, offers a wider variety of services for shoppers and businesses to exchange money. For instance, only PayPal allows shoppers to transfer money to or from a bank account, in addition to using credit or debit cards. Moreover, shoppers can use the service to wire money to others, without requiring them to get a paid account. PayPal is also the only way to go if you're a worldwide shopper, allowing country-to-country transactions.

For the vendor, Google takes a smaller cut of payments than eBay's PayPal does. PayPal starts at US$0.30, in addition to 2.9 per cent of the total payment. Google, however, beats the rate with US$0.20 and 2 per cent, respectively. In addition, merchants who use AdWords get a break on these fees, at ten times the amount spent on advertising.