Google's 'Checkout' Swipes at Paypal

Written by Brett Thomas

June 29, 2006 | 15:09

Tags: #checkout #citigroup #fee #financial #mastercard #online #payment #visa

Companies: #ebay #google #paypal

For everyone out there using Paypal as their personal money transferrer, there's a new game in town. Google has recently brought its new Checkout service online, partnered with (read: sponsored by) CitiGroup Financial.

Google Checkout uses a revenue model very similar to Paypal, but with a slightly different fee structure. Rather than paying 1.9% and $0.30 in transaction fees, a seller would pay 2% and $0.20 in transaction fees.

Though the difference seems miniscule, the change can generate considerable savings for eBayers and other small shops that do lots of small transactions, as opposed to a few big ones.

It was initially estimated that Google's entrance into the ring could genuinely damage Paypal's business model, but it seems that the two will more find an equilibrium and co-exist peacefully, much like Visa and Mastercard in the credit world. The fee structure clearly makes each service better for different types of sales, and one has to wonder if either company strongly wishes to make their pricing model more complicated in hopes of garnering the other's market share.

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