EBay`s PayPal Holds Off Google`s Checkout - eBay's Justified Paranoia
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eBay was justifiably worried. Most brands are affected by the entry of a strong second brand, and with complaints over its product (PayPal) in terms of rates, service and even security, most users and analysts welcomed a reliable alternative (PayPal is useful but even I would like to have a choice). The lower transaction costs which Checkout offers would be disruptive to PayPal's model. It is certain that if Checkout was accepted on eBay, for the transaction fees alone, sellers and buyers will switch.
Google Set to Grow
Inevitably, the use of Checkout as a viable system of online payment will increase over time, or one of the other Internet companies will develop or buy out another payment system. But to knock PayPal off its pedestal, Google has to do better than just offer lower transaction costs. PayPal, like eBay, is highly specialized (it's not just a back end product, it can stand alone even without eBay). Checkout is already an option for sellers and buyers in the US, and it is affecting PayPal, since every payment made on Checkout makes one less that would have been made on PayPal.
The current one nation status of Checkout compared to PayPal's 55 nation coverage really makes the idea of competition moot, but Checkout will definitely grow over time as more people use Google and shop using Checkout as an all in one payment system. However Check out will never be a peer to peer payment system; it will predominantly be used to purchase goods online from cooperating merchants.
PayPal is far more popular both worldwide and in the United States, but as Checkout grows it will be a viable alternative for buying goods online. This is a place that PayPal would love to penetrate, but most online shoppers use their credit cards directly for this purpose. And this is where the real battle is going to be fought, as both PayPal and Google know; every online payment system's vision is to ultimately become the preferred online payment system. It's not a peer to peer payment system that will come out on top in that particular case, but a cheap, convenient, checkout system.
