Google Checkout launched early this morning and may significantly change the online shopping sector. The system offers low transaction costs for merchants and mediation between buyers and sellers online in exchange for access to what will be a huge amount of data about shopping and sales conversions. There doesn’t appear to be many benefits for buyers in the system. There are $10 discounts at many participating stores, but in order to accept a new system like this, certainly, we would need features that beat what’s already available.
Not a stored value system like PayPal, Google Checkout is more like a unified shopping identity for buyers who can give their credit card number to just one company (Google) and limit email contact received later from places they shop online. The Google Checkout site is in its infancy, with only about 100 stores listed as participating at the program’s inception and few variant URLs that redirect yet to the program page. The program, though high profile in the media, is described on its page almost entirely in terms of its benefits to sellers. The system is limited to sellers in the US, many people were hoping that it would be available in more countries than PayPal is.
AdWords participants will gain extra benefits, with a $10 credit in Google Checkout fees for every $1 they spend on advertising with Google. Transaction fees are remarkably low, roughly 2/3 of PayPal’s basic rates. The service’s pricing structure may ultimately be profitable enough for Google, but the major strategy here could be to access shopping data. The biggest question then appears to be whether consumers trust the Google brand enough to look to the company for more than just access to the rest of the world’s data, but as a repository for our own data kept private from a world of online shopping vendors. The benefits over PayPal seem clear for sellers, but whether consumers will react favorably is a question we’ll have to wait to be answered.
