Select your localized edition:

Close ×

More Ways to Connect

Discover one of our 28 local entrepreneurial communities »

Be the first to know as we launch in new countries and markets around the globe.

Interested in bringing MIT Technology Review to your local market?

MIT Technology ReviewMIT Technology Review - logo

 

Unsupported browser: Your browser does not meet modern web standards. See how it scores »

{ action.text }

That’s enough savings to cover the full cost of an AdWords campaign for some smaller merchants – which means consumers are likely to see the Google Checkout logo appear on many new websites this year. And Google’s reputation as a largely benign and trustworthy company may prompt many consumers to sign up for the service, even if it means typing in their address and credit card information one more time as part of the Google Checkout signup process.

In fact, Google Checkout comes with a virtually built-in user base. Many Google users have already entrusted personal information to one or more of the company’s numerous online services: Gmail, Google Toolbar, Google Spreadsheets, Google Notebook, Blogger (which is owned by Google), the free photo-storing service Picasa (also owned by Google), Google Calendar, and Google Desktop (for indexing the contents of a hard drive). So it would be a relatively small step to give Google a credit card number and let the company track online purchases, especially when the promised reward is simpler transactions in the future, along with tools like the purchase history and transaction tracker.

PayPal, of course, offers similar purchasing services, and also conceals buyers’ credit card information from merchants. Today, some 105 million people have PayPal accounts. It’s one of the most common methods for individuals to exchange funds person-to-person over the Internet: PayPal members can send money to anyone with an e-mail address, and the company recently introduced a system that lets cellular subscribers make PayPal payments from their phones. And, unlike Google Checkout, where the money flows only from buyers to merchants, PayPal can be used to request money and to receive charitable donations.

But PayPal has had nearly a decade in which to emerge as a payment system used everywhere on the Web – and it hasn’t. Founded in 1998, the company didn’t gain momentum until 2000, when sellers and buyers at eBay began to adopt it as a quick and largely fraud-proof alternative to credit cards, personal checks, and eBay’s own internal payment system, called Billpoint.

Today, 70 percent of all PayPal transactions are payments for items purchased on eBay. That has limited its visibility outside eBay. While numerous small Web retailers let customers pay through PayPal, few major online shopping destinations use the system.

EBay may not feel yet that PayPal is in a vulnerable position, but it’s certainly keeping tabs on Google Checkout. This week, it added Google Checkout to its list of payment services not permitted for use by eBay buyers and sellers. The company’s Accepted Payments Policy states that the company determines whether a payment service is “appropriate for the eBay marketplace” based partly on whether it provides privacy and anti-fraud protection and whether it has “a substantial historical track record of providing safe and reliable financial and/or banking related services.”

EBay spokesperson Catherine England says Google Checkout falls short on this second criterion. “As you know, Google Checkout is a week old, so there isn’t a lot of clarity as to how people will use it,” says England. “We really look for a good history and track record, so we’re holding them to the same standard that we would hold any other service. Once they’ve had some time, we’ll probably reevaluate – but there’s no way to speculate until we have more information.”

8 comments. Share your thoughts »

Tagged: Web

Reprints and Permissions | Send feedback to the editor

From the Archives

Close

Introducing MIT Technology Review Insider.

Already a Magazine subscriber?

You're automatically an Insider. It's easy to activate or upgrade your account.

Activate Your Account

Become an Insider

It's the new way to subscribe. Get even more of the tech news, research, and discoveries you crave.

Sign Up

Learn More

Find out why MIT Technology Review Insider is for you and explore your options.

Show Me