San Francisco — The comptrollers have invaded the Googleplex, once an empire of “freebies” is now being replaced with “fee”. Google Checkout has so far offered steep discounts to Google AdWords advertisers, is now shifting to a tiered fee structure that will eliminate a key promotion tied to merchants’ use of AdWords. Not sure if the move symbolizes a sign of Google Checkout’s success or struggle, but rates are increasing for most sellers effective May 5th.
Google has angered online merchants who use its Checkout service by hiking up the fees it charges for the online payment service.
Google is altering the fee structure at Google Checkout from a consistent 2.0% + $0.20 per transaction rate to a new tiered rate service which will reflect the different goods and sales processed via Google Checkout (a Google Checkout Quality Score?).
Rival service PayPal has been heavily lambasted for hiking up the fees and for aggressively “encouraging” its use on eBay — Australian eBay sellers could only take payment via PayPal until the company overturned the move in the face of user fury, and regulatory sabre rattling.
Hence the disappointment expressed by posters in merchant forums: “The whole reason to switch to Google Checkout was that they had lower processing fees and now they are basically the same as Paypal!”
Google Checkout sent this email out to vendors last night:
We are writing to inform you that on May 5, 2009, Google Checkout’s transaction processing fees will be changing. We will be transitioning from our 2.0% + $0.20 per transaction rate to a new tiered fee structure, where the rates will vary depending on the dollar amount of your monthly sales processed through Checkout. The rate you will be charged beginning on May 5, 2009 will be based on your sales processed through Checkout during the month of April 2009. Each month thereafter, we will continue to use the prior month’s sales volume to determine your transaction processing rate.
What does this mean? It means that if your monthly sales is more than $100,000, the lower your overall fee structure will be:
| Monthly Sales Through Google Checkout | Fees Per Transaction |
| Less than $3,000 | 2.9% + $0.30 |
| $3,000 – $9,999.99 | 2.5% + $0.30 |
| $10,000 – $99,999.99 | 2.2% + $0.30 |
| $100,000 or more | 1.9% + $0.30 |
Merchants in the UK currently pay 1.5% of the value of the transaction and 15 pence. From 5 May this will be replaced by a tiered structure beginning at 3.4% and 20 pence per transaction if monthly sales are worth less than £1,500.
What is more worse! Any cross-border transactions with buyers will incur an additional 1% fee. And within a period of 10 days notice, we may also charge higher transaction processing fees to merchants that incur excessive charge-backs or otherwise pose financial risk to Checkout.
Furthermore, Google Checkout users will also be losing their AdWords free transaction processing. The new Adwords fee processing structure will be based on the Adwords spend of the advertiser, and the amount of Google Checkout sales:
| Sales Through Google Checkout | Transaction Fees until May 5, 2009 |
| Sales of up to 10 times your monthly AdWords spend | FREE |
| Sales in excess of 10 times your monthly AdWords spend | 2% + $0.20 per transaction |
| Sales for Merchants that do not advertise with AdWords | 2% + $0.20 per transaction |
As for non-profit associations, Google has also adjusted the processing structure in this sector as well:
Google Grants recipients based in the United States are eligible for free transaction processing for donations received through Checkout until January 1, 2010. All other IRS certified 501(c)(3) organizations will be charged a low 2% + $0.20 per transaction until May 5, 2009, after which they will transition to the tiered pricing structure outlined above. There are no monthly, setup, or gateway service fees. We reserve the right to impose reasonable limits at our discretion.
Checkout users in Google’s forum were furious at the changes which they believe are now no better than PayPal’s. The new rates are almost identical to those offered by PayPal, but PayPal offers many extra features for the fee.
The UK prices are detailed here and US fees are here, and reaction from angry users is here.