What Does Google Have in its Wallet? - What Google Faces in This Venture
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A number of analysts are seeing this move as truly dangerous to PayPal. Gartner analyst Avivah Litan observed that “This is probably the biggest threat to PayPal that has come along so far.” Still, Google does not have a well-known name in this area, and PayPal does. Does search engine expertise translate into the expertise necessary to succeed with this particular service? Google seems to be making a go of plenty of other services that you would not naturally connect with search, such as email. However, none of those services involve an exchange of money, and that’s an area that makes people a little touchy.
Strangely, the fact that Google doesn’t have a name in this area could, alternatively, give it an advantage. While many PayPal customers have used the service successfully, others have experienced their share of horror stories –- payments not going through, accounts frozen, inability to access money, unresponsive (or worse) customer support. Google has a reputation for doing things right once it ventures into an area. If it does decide to compete with PayPal, either now or as part of an expansion of Google Wallet, it could benefit from the release of a lot of pent-up frustration from PayPal customers.
But Google’s biggest hurdles are ones that I only hinted at above. Yahoo, eBay, and even Microsoft (with MSN Wallet) have tried to break into this area, and failed. Yes, the biggest problem was lack of customers, especially as compared with PayPal, but there were other problems. According to Max Levchin, when PayPal squared off against eBay’s offering, “PayPal was a startup and had the cojones to learn how to beat fraud the hard way, so…PayPal had a more compelling offering, because we were willing to take on a lot more risk.”
If Google does decide to go head to head with PayPal, it must be prepared to learn how to deal with fraud, and how to handle risk. Neither of these are easy. Then again, Google didn’t get where it is today by taking the easy way.
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