Google’s push last week into credit card transaction processing for its free classifieds service Base is a worry for eBay/PayPal, which is not going to sit idly by.
In its characteristically understated style, Google has begun offering a new payment option for a handful of people who had listed items for sale on the Google Base posting service, a step that could eventually put the Mountain View Internet giant in direct competition with eBay and PayPal.
The Google Account allows merchants to easily accept payment for creative works ranging from poems to recipes, as well as e-commerce mainstays such as books or collectibles.
The search engine also offers payment services for buying video, items from its online company store, and licenses for its Google Earth satellite mapping service. Similar to those offerings, people who are accountholders with Google can now use their credit card to buy items listed in Google Base.
In its final form, analysts believe the service could become an alternative to eBay’s payment service PayPal, allowing Google to compete with the San Jose company — one of its biggest advertisers.
AuctionBytes.com reports sellers on eBay are concerned the auction site’s new "Safe Payments" policy it rolled out last fall, could be used to block Google’s payment method, making for a less universal world of online auctions.
The report says unless eBay specifically states in its policy that it accepts Google’s payment service, sellers will be violating the eBay policy if they include any mention of it.
The relationship could become more and more strained because Google really has the potential to become the toll bridge to e-commerce,’ said Dan Schatt, senior analyst at Celent, a Boston-based research firm.
But Tom Oliveri, the product marketing manager for Google Base, said the payment service was not intended to compete with eBay or PayPal.
These are different products, Oliveri said, noting that eBay is purely commercial, while Google Base, which is still in a “beta” testing phase, is more of a free exchange of information.
According to Google, eBay merchants will be able to post information about items they are selling on eBay on Google Base, too. A seller can ask buyers to close the transaction on Google Base, using PayPal or the Google Account — or direct them to eBay.
Google is a valuable partner, and we have no reason to believe they would not remain a valuable partner,’ EBay spokesman Hani Durzy said.
But there is no turning back from the rivers of transactional gold, and financial analysts are glowing with the possibilities for Google’s bottom line.
But the move is not without risk to Google’s do-no-evil image if it was to experience the onslaught of phishing emails that have tarnished the PayPal and eBay brands with consumers.
And auction watchers note there is a lot of work to be done to Base’s bare-bones front end before it can challenge eBay. Keeping the beta feel going as long as possible, Google said it was allowing sellers to register their interest.
The company has started with a "very small number" of sellers and expects to include more over the next several months. People interested in selling on Google Base are asked to submit their names and email addresses.
Google said on its company blog that it expects to add payment functionality to other Google services in the future.
By expanding the new payment service beyond Google Base, to its regular search service, Google could change its advertising model. Companies currently pay Google each time an interested person clicks on their Google ads, regardless of whether a purchase is made. In theory, analysts say, companies would be willing to pay much more if they knew how many times their ad led to a purchase, essentially turning traditional wide-ranging marketing costs into a per purchase charge.
Schatt said Google does not need the payment service itself to be particularly profitable, because the information about the people who use it would be valuable to advertisers.
The addition of transaction services on Google Base takes the latter in closer competition with online marketplace EBay. The latter company recently unveiled EBay Express, a site that lets shoppers’ by-pass EBay auctions and buy new products from merchants at a fixed price.
Google officials declined to speculate on how the service might develop in the future. In a statement posted on the company blog, Google said it would “continue building payment services that meet the needs of Google users and advertisers.”
It was unclear whether Google would charge an additional fee for processing the payments.
Elsewhere, Microsoft is planning to roll out a free online classified service code-named “Expo” later this spring. Since November, it has been used by Microsoft employees to buy and sell everything from homes to concert tickets and computers, a Microsoft spokesman said.