Prompt's TechBlog

Google's long-threatened PayPal killer is live. Google Checkout is supported by an API and there's a one-button option for accepting payments on your website.

Unfortunately, they've adopted a familiar 'we are the world' mentality we often see from US organisations, not telling you until you try to register that it's only open to US residents. So we can't take it for a spin to tell you how good it is.

So far there are about 50 stores participating, but Amazon and Ebay aren't among them. The idea is that you can use a single Google account to pay all of these shops without sharing your credit card details with them. But I'm not convinced you'd want to shop at many of them regularly.

Google's got some catching up to do. PayPal claims it has 100 million account holders in 55 countries worldwide.

What made PayPal successful was the auction market and Ebay's ability to promote PayPal payments with listings. Google's taken inspiration from this: in future, text adverts placed against search results by companies accepting Google Checkout payments will be indicated with a shopping cart logo. Adwords advertisers will also benefit from lower charges than everyone else: the standard charge is 2% + $0.20 per transaction. Adwords advertisers can receive $10 of payment for every $1 of Google Adwords advertising spend, free of Google Checkout charges. By contrast, PayPal charges 2.9% + $0.30 per transaction (scaling to 1.9% for bulk traders). (Both figures are US$ for comparison purposes - Paypal's UK charges vary.)

It's possible that Google's brand will carry it a long way into the small business market, where PayPal hasn't really dug in as deeply as we might expect. It seems more likely that Google Checkout will be a sort of loyalty bonus for existing Adwords advertisers.

For a company so large that's driven almost exclusively by advertising, Google's pretty vulnerable. If successful, Google Checkout will enable the company to create a new revenue stream while also building loyalty to its advertising network. Given its massive reach, Google doesn't need to have a huge sign-up rate to create significant returns.

Google's been criticised in the past for not taking stronger action against clickfraud, where advertisers must pay for fraudulent clicks on their adverts. The company still has to build a lot of confidence in its ability to manage financial transactions.

I can understand how Google comes to enter every technology market going: it has the opportunity, has smart people, and has the freedom. Above all, it has that geeky desire to keep making things. But some of those things are closer to its goal of 'organising the world's information' than others are. Google maps, Google Spreadsheet, Google Base, Google Trends, Google Notebook, Google Calendar and Google Page Creator are clearly part of that vision.

Google Web Accelerator, Google Talk, football community Joga.com, Sketchup and Google Checkout don't quite belong. They might be great technologies. They might be great ideas. But just imagine what Google could achieve if it really did dedicate 100% of its energies to organising the world's information instead of getting sidetracked by the fact it can do whatever it wants.

tags: Google Checkout | PayPal | Google strategy