A Checked-Out Google Checkout

It's the moment we've all been waiting for. Google (Nasdaq: GOOG  ) has released its long-awaited "Google Checkout," a new product that has been grist for rumor mills for quite some time, not to mention frequently dubbed a PayPal-killer in the making. The reality seems a bit less dramatic, and maybe even a bit anticlimactic. (Here's a mini-quake though: Google Checkout is not a beta launch.)

Internet shoppers will be able to input their credit card information into Google Checkout, which will in turn pay Web merchants for items. (The merchants will pay low transaction fees connected to the service -- lower than those that credit card companies charge -- and AdWords merchants will be able to apply some of the 2% fees toward keyword purchases on AdWords.) It's touted as a quick, safe way for consumers to pay for transactions, without having to reenter their credit card information over and over on different sites. In an interesting aside, Citibank (NYSE: C  ) customers will get a small rebate, $5, when they sign up for Google Checkout.

eBay's (NYSE: EBAY  ) PayPal still seems to have a major differentiator -- that is, it allows Internet users to either log credit cards or use their bank accounts or store cash in their PayPal accounts so they can transfer cash to other individuals or businesses. Theoretically, PayPal's also a good solution for anyone who would rather use cash than run up their credit cards. Meanwhile, one of its latest innovations is mobile payment -- users can send money via text message to anyone with an email address. (Google said that it isn't working on a mobile version of Google Checkout at the moment.)

Google fans might call me shortsighted, but I don't see anything particularly groundbreaking here. I know this new service underlines Google's desire to become a one-stop shop for e-commerce needs -- consider how it complements Google Base, Froogle, Google Video, and so forth -- not to mention being a really snazzy solution for advertisers. However, I'd guess most of us already have our credit card information logged with our most trusted e-commerce sites, and it's not like it's a particularly onerous procedure. On the other hand, Google Checkout might come in handy with smaller, more obscure Web merchants that folks don't fully trust.

Meanwhile, with Google developing into an ever-larger and more pervasive repository of personal data, some people may fear that the company is becoming a fat target for identity thieves (especially with Google's recent privacy issues). This service had better be as secure as Fort Knox. Furthermore, customers might not be comfortable with Google's gathering of information on habits, likes and dislikes, and where and when we buy merchandise -- especially given its interests in advertising. (Indeed, Tim Beyers recently wondered how evil Google will become.) For now, though, Google says that it won't track the relationship between keywords and purchases, although it didn't rule that out for the future.

It's also worthwhile to note that this is an arena where other major Internet companies have tried and failed. This past winter, Rick Munarriz wrote on this very subject, and although he didn't rule out Google's chances, he pointed out that Microsoft (Nasdaq: MSFT  ) ditched efforts to convert Passport into a payment service, and Yahoo! (Nasdaq: YHOO  ) gave up on its PayDirect service in 2004.

To its credit, Google has long said that it wasn't going to try to take on PayPal with this service, and for now it's less PayPal assassin than PayPal pain-in-the-posterior. Call me crazy, but I guess I expected something a little more earth-shattering from Google Checkout.

eBayis aMotley Fool Stock Advisorrecommendation. Microsoft is aMotley Fool Inside Valueselection. Take the newsletter of your choice for a 30-day free spin.

Fool contributor Alyce Lomax does not own shares of any of the companies mentioned.


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