It pays to be curious. Over at eBay (NASDAQ:EBAY), the world's leading auction marketplace, the company is beefing up its PayPal presence by offering winning bidders expanded coverage of PayPal's buyer protection program.
For eBay sellers who have generated strong feedback scores on the site, eBay will back up those listings with $2,000 in free coverage for qualified transactions if the deal is sealed using the popular PayPal payment service. That doubles the current offering. Other sellers will be able to offer $200 in coverage. That replaces a program that covered $200 in transactions for a $25 processing fee, regardless of how the buyer paid for the item.
Longtime fans of eBay have a good reason to be suspicious. It smells too good to be true, as eBay is usually bent on introducing new premium features or inching its listing fees higher, rather than giving stuff away and doubling the coverage for its most trusted sellers. The catch here is that these offerings are only available through PayPal.
My theory is that if you were to bring in eBay for questioning, it would ultimately break down and concede that "Google Checkout made me do it!"
Google's (NASDAQ:GOOG) nascent payment service hasn't been a big hit on eBay so far. eBay has seen to that. Since last year's debut of Google Checkout, eBay has forbidden its use on the site. Back then, the reasoning was that Checkout was still a new service. Well, Google's e-pay offering is still on the blacklist, despite the fact that it is clearly established at this point. Several online merchants are promoting the platform, in part because Google has waived transaction fees through the end of 2007.
Sooner or later, it will have to be allowed on the eBay platform, and my guess is that this is a pre-emptive strike in making its proprietary PayPal option that much more attractive.
The move is symbiotic, too, as it will help eBay compete with thriftier havens like Craigslist and Google Base that can't offer this kind of consumer protection. So, sure, go ahead and enjoy eBay's generosity. It's a sweet deal. However, always remember that there is no free lunch -- even if you keep that lunchtime tab under $2,000.
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Longtime Fool contributor Rick Munarriz is a satisfied eBay user with 170 positive feedback reports to show for it. He does not own shares in any of the companies mentioned in this story, and he is a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance.
