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eBay Slams the Door on Google Checkout

Posted by inet - 2006-07-08

In the ongoing fight between Internet giants the latest round has eBay coming out swinging. Shortly after Google rolled out a PayPallike payment service called Checkout eBay banned it from being advertised on auction listings.
Google Checkout joins AlertPay AuctionChex and or so other payment services blocked by eBay. Payment methods allowed by eBay include banktobank wire transfers Visa Discover MasterCard and of course eBay's own payment service PayPal.

"EBay is not able to monitor or police the actual payment methods that buyers use to purchase items from eBay sellers" said Hani Durzy a spokesperson for eBay. "But we can control through our Accepted Payments Policy what payment methods sellers advertise on their personal pages."

EBay updated its Accepted Payments Policy on Thursday. The update added Checkout to the list of banned services. "We continually monitor new payment systems and methods as they come to market" he said.

Tried and Tested

EBay's move to block Google Checkout which formally launched on June is not intended as a measure to protect PayPal against competition from Google's new service according to Durzy.

"We have around million people worldwide using PayPal and dozens of billions of payments take place over PayPal every year" Durzy said. "We are the biggest player in online payments and we have already faced a lot of competition from firms such as Citibank and Visa."

Durzy said the reason for the block is to protect users. "For a payments method to be accepted by eBay it has to have a historical track record of secure operation" he said.

"Obviously Checkout has just been launched so it does not have a track record" he explained. "My understanding is that it acts as an electronic wallet by storing a user's credit card number so it is not a competitor to PayPal which acts as a storedvalue account."

PayPal Killer?

Analysts for the most part do not see Google Checkout as a real threat to PayPal's dominance in the world of online payments.

"As it stands right now Checkout does not compare to the functionality PayPal has" said Mukul Krishna a Frost & Sullivan analyst. "Google is trying to augment its service by providing a simple payment platform. It's not even close to a 'PayPal killer' right now."

Krishna also noted that Google will be using Checkout as a way to collect more consumer information to make its advertising strategy more effective. To help drum up business Google is offering online merchants a discount on Checkout fees in return for participating in its AdWords system.

"In the medium and long term Google's checkout service could become a serious threat to PayPal if it widened its target market from advertising to include all types of merchants and merchant sales whether they are linked to ads or not" said Avivah Litan an analyst at Gartner.

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