E-COMMERCE
Google launches e-payment service
29-06-2006
by Maxim Kelly
Search engine Google has announced the launch of its long-anticipated payments service, Checkout.
Colloquially known as Gbuy amongst Google staff, at face value the product is similar to online payment service PayPal, and there has been much media speculation that Checkout may threaten internet auctioneer and PayPal owner eBay's dominant position in the online shopping space.
The services are similar in that both enable online vendors to process payments for their merchandise. Where they differ is that Checkout will not allow person-to-person transactions or a cash balance to be held in an account.
However Google's main innovation seems to be combining Checkout with its AdWords programme. Online shoppers can find vendors that accept Google Checkout by looking for the supermarket trolley-style Checkout icon embedded in advertisements on a Google search results page, or whenever they come across the Google Checkout option on a merchant's website.
"By integrating the checkout process with search and advertising, we're helping our users complete the cycle of searching, finding and buying," said Salar Kamangar, vice president of product management at Google. "In the offline world, shoppers don't tolerate long lines and tedious data entry just to buy something. They shouldn't have to in the online world either. Google Checkout simplifies and improves the online purchase experience for both consumers and merchants."
People using Checkout will be charged USD0.20 plus 2 percent of the transaction value per transaction. This compares with USD0.30 and 1.9 percent per transaction with PayPal.
One concern with the Checkout service is that Google could potentially combine personal financial data with search histories of Google users and then display search results with Checkout-enabled adverts high up the search result rankings.
Speaking to ENN while on a visit to Google's European headquarters in Dublin where the CodeJam competition for aspiring programmers is being held, Google vice president for engineering Douglas Merrill said this was not an option for Google. He conceded that Google was in the business of making the world's information accessible but that Checkout actually involves individuals providing Google with their information.
"Search is a very personal experience and the key thing with search is you trust the thing you are using, therefore from the very beginning our services have been built to be very careful with user information," he said.
Google senior vice president of operations, Urs Hoelzle told ENN the data retention issue was "tricky" and there was much discussion amongst Google engineers about it when Checkout was in development.
"There is a tension between having information about a user and having a better product," Hoelzle said. "I think everyone agrees it would be better if no data is saved... [but] we see that if we have some info on what you searched for then we can better predict what you want."
In light of this concern Merrill was adamant that there would be "no association" between adverts and search.
"Everyone wants to be number one [search result] but there can be only one. Our search algorithms are robust enough to rebuff manipulation results," said Hoelzle, who is credited with writing 197 of Google's 200 mathematical processes.
Privacy and manipulation could theoretically be a concern for online vendors too. The attraction of Checkout is that for every USD1 merchants spend on Google AdWords, they can process USD10 in sales through Google Checkout for free. However this raises the spectre of Google having enormous amounts of business intelligence about vendors' customer behaviour from their initial queries through to the punter's mouse-click and conversion of a search into a sale.
Many service providers have already integrated Google Checkout with their e-commerce platforms, including GSI Commerce, MonsterCommerce, and ChannelAdvisor. Online shops such as Jockey, Starbucks Store, Levi's, Timberland, Buy.com have been the first to sign up with Google Checkout.
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