Many industry observers counted Google Inc out of the online payments business, but the Internet giant is signalling that it maintains a tantalising toehold in the business, and its sheer size guarantees that its competitors ignore it at their peril.
Mountain View, California-based Google reawakened its payments business recently, introducing an online application designed to automate implementation of its Google Checkout service to handle payments so that even the smallest online mom-and-pop shop can be up and running in minutes.
Many online merchants felt that Google was less than committed to handling online payments, especially after the company launched a significant price increase that eliminated its long-standing practice of offering subsidised processing fees to merchants that also used its AdWords program for online advertising.
By bringing its pricing close to its online payment rivals, eBay Inc’s PayPal Inc and Amazon.com Inc, it was seen by many as a sign that Google was reigning in its ambitions in the online payments market.
The price hike ricocheted around the web, as many merchants vowed to leave Google for PayPal.
But the migration never materialised at levels mirroring the online outrage, and Google’s decision to end the subsidies have, no doubt, helped the search giant ride out the weakening online advertising market amid the recession.
The launch of the new online tool has rekindled interest in Google Checkout, which the company has been relatively quiet about since its launch in 2006. Google has never reported any market penetration numbers for the service, and company executives have rarely elaborated on it.
The new online tool is designed for ease of use, with the goal of making it as simple as a few clicks of a mouse for joining the service.
The tool allows merchants to link Google Checkout with merchants’ inventory records stored in Google Docs spreadsheets formatted according to a company template. It also allows merchants to easily upload images, product descriptions and availability, along with prices.
Online merchants can embed the tool on a Google-hosted site or on a blog or other Web site. Checkout stores consumers’ payment card account data and makes it easy for shoppers to complete purchases online.
Anjali Vaidya, an associate product marketing manager for Checkout, wrote in a Google Checkout blog post announcing the newest tool that “selling online has never been easier – no complicated coding or technical tasks are required.”
Almost without notice, Google also introduced a ‘buy now’ feature for the Checkout service in July, designed for sellers of digital goods, such as downloadable songs or games.
In fact, across the globe, Google is giving hints that it is far from ready to concede the payments market to PayPal or Amazon. In Australia, Google recently gained a financial services license that permits it to operate Checkout as a “non-cash payment product.”
According to the product disclosure statement lodged with the Australian Securities & Investments Commission, Google Payment Australia will feature an e-wallet service in which buyers can store their credit or debit card information for easy access when buying from participating merchants.
Thus far, access to the Australian service is restricted to developers working on products for the Android Marketplace – the open source operating system for mobile phones intended to rival Apple’s iPhone. Australians can access some free Android applications, but there are restrictions on the countries where developers can offer their applications for sale. Linking an e-wallet application with payment functionality would be a huge step forward for Google, and could create a model it could replicate in other global markets.
Not content to sit on its market dominance, PayPal is set to introduce a set of online tools designed to allow merchants to build a variety of advanced applications off its payments platform.
Taking a page from Apple’s wildly successful iPhone application strategy, PayPal is opening up its systems to outsiders to unleash developer innovation.
Under its new Adaptive Payments program, PayPal will make available an application programming interface, or API, available to developers, enabling them to build payments tools that will easily plug into PayPal’s systems.
As many developers already have PayPal accounts, leveraging that knowledge base could help the payments service leapfrog the competition, especially with regard to mobile payments.
PayPal has been working on mobile payments since 2006, when the firm launched a text-based system called PayPal Mobile, which might have been a bit ahead of its time. Last year, PayPal built it into a payment application that runs on Apple’s iPhone. PayPal has also become the only payment provider for Research in Motion Ltd’s application store for its BlackBerry devices.
In May, Amazon announced free processing for some clients, ostensibly to lure disgruntled Google Checkout users. Amazon Web Services, which covers payments and many other capabilities, is also a closely held secret when it comes to user numbers; the company has not reported how many companies use its Flexible Payments Service, launched in 2007, which also enables third parties to craft tools for its payments systems.
Finally, no discussion of online giants would be complete without mention of Facebook Inc’s fledgling payment system, which involves converting currency to credits that can be used on its Web site.
The social networking site is about to start testing a major new expansion to the Gift Shop that will integrate items from third-party developers.
The move will expand Facebook’s merchant platform beyond the epay With Facebook tests that are running inside a few applications and, for the first time, integrate a variety of third-party virtual gifts into the Facebook Gift Shop.
In addition, for the first time, Facebook users will be able to purchase physical merchandise in the Gift Shop with Facebook Credits.