Is Google Losing Money With Checkout?

The short answer is yes.

However losing money is part of the plan to market Checkout for the next year. Google has extended free processing for merchants till the end of 2007 in an effort to get more merchants to sign up. Even better might be the $10 off all any purchase Google will be giving to customers who pay with Checkout.

Seems Google is getting more aggressive in promoting Checkout as a competitor to the eBay owned PayPal. As I posted back in June it started with the $10 worth of free transactions for every $1 in AdWords spend. Then in early November all transactions were free to merchants until the end of this year. And now those free transactions will be extended an additional year.

There is also the added benefit of the little shopping cart icon next to the AdWords ad of any Merchant using Checkout. The cart icons will likely improve clickthrough on the ad, which will have the eventual benefit of reducing the average cost per click for the advertiser as their CTR goes up.

Not all is perfect in Checkout land. They do put up barriers to merchants getting a customer’s email address for future marketing and sales. Good for the customer perhaps, but not so good for the merchants. According to the New York Times article, Google Steps More Boldly Into PayPal’s Territory, which is responsible for much of the information of this post, J & R Richard recently had to suspend use of Checkout due to processing delays. StarbucksStore.com has also reported ‘operational issues’ with the system.

Still all the free goodies Google is putting out there for both merchants and consumers will likely get more of each to adopt Checkout as an online payment method.

Of course given the way Google keeps upping the ante, maybe we should all hold off a little while longer. Google certainly has the reserves in the bank to offer more. Maybe if we all wait a few more months they’ll start paying us a transaction fee to become a merchant and offering to pay for consumers purchases outright. Ok, neither is going to happen, but I wouldn’t be surprised to see additional freebies tossed in as Google gets more aggressive in promoting Checkout

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3 comments

  1. I wonder if eBay not allow google checkout as a payment method was a big blow to google checkout or if google had considered that eBay may have done that. Either way, eBay not allowing it must have taken away a huge chunk of googles earning potential.

    I’m surprised google havn’t filed some kind of anti-competition suite against eBay.

    It would be nice to see google offer some kind of “free advertising” to mercants using google checkout as the payment method.

  2. Grappling with eBay will increase tension between them, while Google may watn to partner with eBay (or it already has in other fields) in the future.

    I certainly see Google developing a good payment system, when it goes worldwide.

  3. I think Checkout is one of those things that just needs to be out there longer. The more people that use it the more that will likely want to use it. As a merchant the discount on AdWords is a big selling point, though losing out on potential customer information is a knock against the system. Of course being able to hold back the info is going to be a selling point to users.

    I wonder if in time Google will add the ability to transfer funds between those who have signed up for Checkout. It’s a big plus for PayPal.

    I’m sure there’s room for both of them and I won’t be surprised to see more and more sites having both as options for payment.

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