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Saturday, February 25, 2006

Google Base - Different From Paypal

Courtesy of Bill Burnham saw this announcement about buying on googlebase. While Google Base provides data structure and distribution for a wide range of content and information,a subset of items are for sale. To help users more easily purchase and sell Google Base items, we're planning to enable people to buy items on Google Base using their Google Accounts. For buyers, this feature will provide a convenient and secure way to purchase Google Base items by credit card. For sellers, this feature integrates transaction processing with Google Base item management. This may not be good news to eBay trying to promote paypal as the standard for online payments. Google Base will now allow merchants to feed all their listings to Google for free and just take a cut of transaction. Just thought what could be the challenges for Googlebase: whatever applicable to Paypal is applicable to Googlebase as well :
First is Execution – as it is growing like crazy.
Second is the external environment - lots of regulators, lots of associations, and the importance of compliance for a financial institution.
Competition – particularly well entrenched eBay. In terms of payments, this service competes with everybody and it's a much more openly competitive environment

Bill points out, It stands to reason now that Google has essentially completed the infrastructure it needs to launch a Pay-Pal equivalent which one has to believe is now rather far along in its development and will be launched sometime in 2006. In fact, another post on Google's official blog provides the emerging reality therein.
In a follow-up post, Bill highlights that Google is apparently the merchant of record in these purchases. This contrasts with EBay’s approach – they have avoided being the merchant of record for transactions on its site. The merchant of record typically takes responsibility for all charge backs, fraud, etc. Google claims that all transactions processed are non-refundable, but if they are processed via credit cards that is not the case because the issuing bank can always refuse to pay the merchant bank and the merchant bank will typically then stick the merchant with the so-called charge-back. This may point to a few things including Google’s desire to lay the groundwork for Escrow service and launching a merchant bank issuing its own branded credit cards. Net-Net there is a significant difference between eBay’s & Google’s approach towards payment processing – we shall have to see the implications on these account as things unfold.This also brings closer to reality predictions made a while ago about Gemaya, - in particular,Google, and possibly Microsoft and others, attempting to develop their own online payment services to match eBay’s PayPal. And lets wait for the second part - eBay will almost certainly morph PayPal over time into something that looks more and more like a multi-functional consumer bank to become true or would Google jump step the process and be there first.

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