Tuesday, 22 May 2007

Checkouts - Google vs Paypal

Since the launch of Google Checkout, there has been much talk about whether Paypal's dominance of the online checkout market would be under threat. It seems the launch of the search giant's offering has been taken seriously by Paypal, who have recently launched a new set of incentives to ensure banks and technology providers use their Express Checkout service rather than Google Checkout. Paypal are now offering a $2500 bonus, tech support and marketing materials to merchants who sign up to their Express platform.

I think Paypal are right to launch this counter-attack in the "Checkout Wars". After all, with very little to separate the two systems in terms of functionality and cost, Google have a subtle advantage in their favour - they have the Google Checkout badge to offer. A number of commentators have already noted the increase in CTR the presence of the logo brings PPC advertisers. It seems Google were very aware of this fact, and made a bold move early on to make the GC badge even more visible in the listings (see below).


The increase in clicks and quality score resulting from adding the GC badge to listings will undoubtedly lead some merchants to make the switch, if only for this reason. However, this move may yet prove short-sighted. After all, a lot of these additional clicks will arise from pure curiosity - they see the big flashy Google Checkout badge and want to see what it's all about. As such, I'd expect these additional visitors to convert at a lower rate than those who click regardless of the GC badge.

Nevertheless, Google Checkout is attracting interest, clicks and, more importantly, merchants. Whether it will prove a long-standing competitor for Paypal remains to be seen. It's certainly a pretty interesting battle though, and one Google will be desperate to win.

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