ChannelAdvisor - Yes to PayPal, No to Google Checkout

ChannelAdvisor have been pondering when (not if) eBay should allow Google Checkout for payments. I don't hold with their argument that eBay dismiss it as an "unproven system" but view checkout as an e-wallet rather than an e-money payment system. They have fundamentally different ways of operating and e-wallets just don't offer the same levels of buyer protection that e-money providers such as PayPal and Nochex do.

Setting that aside as ChannelAdvisor appear to be championing Google Checkout I was looking forward to giving it a spin whilst signing up for the ChannelAdvisor Catalyst event to be held in London in April of this year. Strangely there were only two payment options offered - PayPal or Mastercard / Visa. No sign of Google Checkout.

I guess it goes to show that for the market at large it really is PayPal Preferred!

Microsoft to challenge PayPal and Google Checkout

Well what do you reckon? Third time lucky for Gates to plunge Microsoft into the forefront of online payments? Microsoft wallet (built into Internet Explorer) was a bit of a failure (as in no one used it), so they changed it to a server based system (Microsoft Passport - and still no one used it!). Now after a week of contemplation, Gates announces he's reviewed plans for an online micropayments project. Watch out for a solution to allow you to economically collect payments from a few pence to a pound at lower rates than credit card merchant accounts would charge.

The thinking behind the re-entry into online payments is a system designed so that you can charge small amounts for online content that's currently free, e.g. Tamebay could charge you 10p for reading this article and it wouldn't all be swallowed up in precessing fees. Now there's an idea... charge you for reading this ;-)

So Microsoft aren't really out to compete with PayPal or even the easier target of Google Checkout (who continue to lag way behing PayPal regardless of the freebies they try to tempt buyers and sellers with). PayPal already have PayPal Micropayments with fees of 5%+ $0.05 per transaction. It will be interesting to see firstly if Microsoft can beat these rates and secondly how easy implementation is.

In a years time you could find yourself paying to read online content from sites like online newspapers. In fact with printed newspapers in decline we predict it won't be long before they're largely published online for micropayments anyway, so Gates could be bang on the button with this one!

PayPal preferred

It's official, the latest JP Morgan Securities survey reveals that buyers prefer PayPal to Google Checkout. Whilst only 6% of those surveyed had actually used Google Checkout only one in five of these were happy in the survey. Contrast this to a massive 42% using PayPal of which almost half rated the service as "good" or "very good".

43% of those surveyed intend to use PayPal but not Google Checkout in the future (80% had heard of PayPal) while a tiny 2.3% intend to use Google Checkout but not PayPal.

The survey shows that PayPal not only has great brand awareness, but the threat of Google has so far had very little impact on it's business. In fact if Google weren't constantly bombarding sellers and buyers alike with cash (either free processing or cash back for paying with the service) their market share would be even less.

Google have a long way to go before they become a mainstream method of payment, or even to be a recognised alternative player in the online payments market. Google's $10 handouts to buyers obviously aren't buying them many friends!

If we pay you enough will you sign up?

Marketworks announced that in conjunction with Google they have released twelve new standard templates for ecommerce websites. Customers can select from 12 new professionally designed storefront templates to instantly transform the look of their Google Checkout enabled storefronts. Previously, customers only had two choices for their storefronts; use a simplistic template that was obviously pre-designed or contract a designer to develop a professionally designed site. The new templates are highly customisable to match the owners own brand.

Nothing particularly surprising there, but what is amusing is to see that Marketworks are practically sucking up to Google

After Google recently approached Marketworks regarding developing a solution allowing it to extend Google Checkout to its customer base, Marketworks jumped on the opportunity. Marketworks immediately began developing a strategy for building and launching professionally-designed storefront templates that were pre-enabled with Google Checkout.

So does this mean they'd never have thought of customisable templates that were Checkout enabled if Google hadn't contacted them? Well so much for Marketworks, a more interesting read today is "Google Checkout's No PayPal Killer" which slates Checkout declaring "How unsurprising: Bribe people heavily, and they'll use your service." That pretty much sums it up, and Marketworks have fallen for it too

1200% of almost nothing is still almost nothing

"Sales via Google Checkout are up 1200% in Q4. WOW." exclaims Scott Wingo on his blog. "They admittedly started with a small base, but it's very interesting to see the growth presented this way. One has to wonder how long eBay's argument for not allowing Google Checkout will hold water that it is an "unproven system". Maybe when they overtake the Paypal transaction volume?" The big question is whether that's likely to happen, and if it does is Checkout desirable on eBay in the first place?

Many sellers already will do almost anything to persuade buyers not to pay with PayPal - reverse surcharging (discounting for all payment methods other than PayPal) was popularised when eBay outlawed surcharging for PayPal. Nochex, Cheques, Bank Transfer, Postal Orders, Merchant Account they cry, and yet overwhelming buyers vote with their feet and continue to use PayPal whenever the opportunity arises. Sure that's partly because it's a couple of clicks for an integrated solution but isn't that exactly what Google are promising? Sellers need to realise that if they start splitting payments between PayPal and Nochex, Checkout et al they're the ones that will lose. Sellers get discounts on PayPal for transactional volume and dropping down a level because you divert funds through another payment system could be cutting off your nose to spite your face.

So what is Checkout at the end of the day? It's certainly not a direct competitor to PayPal, it's more akin to an e-wallet

The electronic equivalent of a wallet for e-commerce transactions. Also called an "e-wallet," it holds credit card data and passwords for logging into Web sites. The wallet data may reside in the user's machine or on the servers of the wallet service. When stored in the client machine, the wallet may use a digital certificate that identifies the authorized card holder. Microsoft's Passport, Yahoo! Wallet and Gator's eWallet are examples of digital wallets."

If Microsoft et al failed with the digital wallet (or does anyone out there actually use it?) what makes you think Google Checkout is likely to succeed? In comparison PayPal is entrenched for eBay users and even if Checkout was allowed on the site take up by buyers is likely to be slow (consider usage of Nochex). Meanwhile PayPal continue to win merchant accounts - in the last year everything from Monster in the US and DHL, Loot, Napster, Sony, Betfair and Ladbrokes in the UK have become PayPal enabled.

Checkout is great for Google.... it helps lock adword users into the brand (or it would do if they weren't giving Checkout away for the next year anyway), but what counts is what buyers want. On eBay they have voted almost unilaterally for PayPal eschewing alternatives like Nochex. For other sites will buyers be tempted to sign up for Checkout or will they just go ahead and enter their credit card direct into the sellers online merchant account?

Google extend free Checkout promotion

Google have announced that Checkout payments will be processed free of charge until the end of 2007. This is fantastic news for merchants with their own websites, effectively increasing their income by 2%.

Not so nice for eBay sellers, of course, who are prohibited from offering Google Checkout. This can only make it more tempting for eBayers to try to push their buyers to Checkout 'behind the scenes': not only will that damage Paypal's profits, it will damage buyer confidence. We all know that the majority of eBay buyers like the integration of Paypal with the site, and the security that Paypal offers them. With a strong incentive from Google now for sellers to try to undermine that, eBay should really wake up and try to do something that will benefit all parties, and allow Checkout on to the site.

Google Checkout buys Paypal's traffic

"It turns out [the company] does not have anyone you can talk to in real life -- only via e-mail," complained an unhappy customer.

Hands up if you can name the company. eBay? Wrong. Paypal? Wrong again. It's Google.

Google Checkout was supposed to be the "Paypal killer" - so much so that eBay changed their own payments policy to forbid its use on the site. But far from being the answer to the prayers of those hoping to break the eBay monopoly, the service has been beset by problems, with customers being charged multiple times, and merchants not being paid at all.

But Google's attempt to buy traffic by offering US$10 off a $30 purchase, or $20 off a $50 purchase seems to be paying off, with increases in traffic from merchants to Checkout which seem to be directly related to the merchants' promotion of Google's $10 offer.

Of course, Paypal too ran a "$5 new account bonus" promotion when they were just a start-up. Would they have ever achieved such popularity without eBay merchants and their customers? It seems unlikely that a few dollars will buy much long-term loyalty; convenience and reliability are much more likely to bring the customers back, and keep them hooked. The acid test for Checkout will come when the promotion period and the shopping season are ended. November and December can be expected to show all sorts of crazy highs for anything associated with retail: the real proof will come in February.