by SEO Consultant
S. Inarejos
Deciding which payment transaction processing system to choose from can be a crucial moment for any business. After all, the right payment software can not only determine conversion rates but it also influences the way visitors and search engines perceive your website. And as Google Checkout approaches its first birthday, the distinctions between itself and its main rival, the nine-year old PayPal, are becoming increasingly clear. S. Inarejos
PayPal, founded in 1998 and acquired by eBay Inc. in 2002, is now regarded as the global leader in online payments solutions worldwide. With thousands of payments solutions available for internet transactions, PayPal has established itself as a reliable and efficient service, able to accept payments from 190 countries in the world and with a staggering 100 million account members worldwide.
PayPal also enables payments between individuals with its eBay integration and auction tools. Apart from accepting website payments and auction payments, it is also possible to create "buy now" buttons, subscription payments, email payments and full API integration for a seamless online experience. Setting up PayPal is free of charge, but transaction fees vary between 1.9% to 2.9% per sale, plus $0.30. The transaction fee can be reduced when the number of total sales per month increases.
Another way through which PayPal increases its revenue is by means of currency conversion fees. PayPal accepts payments from 16 different currencies and the amounts are automatically converted into the main currency of the recipient's account, although commission fees are high.
PayPal is a well-tested system and provides a secure pathway for online payments. With a proven track record that stretches over the course of the past nine years, this mature system is obviously very attractive to users and changing PayPal to any other payment method could potentially result in a loss of conversions.
Google Checkout, popularly seen as PayPal's biggest rival in the online payments sector, was launched in the US in 2006 but only arrived in the UK in April 2007 with the promise to process transactions for free until 2008. From January 1st 2008, transaction fees will be charged only when the total sales are more than ten times the expenditure on AdWords. Hence, Google is trying to promote advertisers - for every one pound spend on AdWords, ten pounds of sales are free of fees. Even if a merchant does exceed this upper limit, the transaction fee is lower than PayPal at 1.5% + 15 pence per transaction.
Tracking affiliate sales is has also been possible with Google Checkout since December 2006, by including a pixel URL with parameters in the cart, whereas PayPal works with a number of software solutions for affiliate tracking.
The second way Google is trying to promote their product is via the Google Checkout badge, which appears on any Google AdWords advertisements if the merchant in question has Google Checkout integrated into its system. The badge makes the advert stand out from the rest and therefore increases visibility and click-through rates. As a result, Google AdWords seems very appealing on two different fronts: no fees and greater online promoting for PPC advertising.
A recent study by Hitwise clearly illustrated that Google Checkout's popularity and usage increased at the same time that discounts from $10 to $30 per transaction were offered during the Christmas shopping period, although its popularity decreased dramatically by the end of the offer period.
Unfortunately Google Checkout is still in its infancy and lacks several of the essential features that have made PayPal so popular. For instance, the inability to accept international payments represents a serious drawback for many merchants willing to adopt this system. Unless your business is really focused on either the USA or the UK, the Google Checkout system is probably not the most compatible for you.
Both services, however, continue to grapple for the online payments market, and the recent confrontation between Google and eBay in the US that has graced headlines the world over has seen many brand the two as public enemies trying to outbid each other. But with eBay recently placing its adverts back on Google AdWords after a temporary withdrawal, it seems that there's some hope yet for PayPal and Google Checkout (which is banned from eBay) to peacefully co-exist.
Ideally, websites should offer alternative systems to users, and offering both Google Checkout and PayPal services seems to be best way forward. Large brands like Starbucks have already opted for this approach. Google Checkout still has a long way to go in terms of matching PayPal's offerings, but its status as a competitor to Google surely represents a positive effect on PayPal's seemingly traditional popularity.
A brief guide to PayPal and Google Checkout
PayPal
- Accepts website payments
- Accepts email payments
- International payments from over 190 countries
- Free set-up
- Transactions fee 1.0% to 2.9% + $0.30 per transaction
- Fees decrease when number of sales increase
- Free eBay auction tools
- Money transfer between individuals
- Money withdraw from bank accounts
- Chargeback resolution
- API integration
- Buy Now Buttons
- Accepts payments from 16 currencies
- High currency conversion fees
- Accepts regular payments such as subscriptions
- Funds can be withdraw at anytime
- Credit verification
- Hides credit card from the merchant while displaying the email of the buyer
Google Checkout
- Free until 2008 - one pound AdWords = 10 pounds sales free
- Free Fraud protection
- Google Checkout badge highlights AdWords ads
- Accept Coupons and gift certificates
- Fast Checkout process
- Cards accepted (Visa, Visa Electron, MasterCard, Maestro, Switch/Solo)
- Refunds
- Flexible payouts (Google pays you daily, weekly or monthly)
- Buy Now buttons
- E-commerce partners
- API integration
- Chargeback resolution
- Payment guarantee
- Credit verification
- Easy integration with Google Analytics
- Tax calculation
- When sales are more than 10 times your monthly AdWords spend, transaction fees are 1.5% + 15 pence per transaction
- Enables online payments after just one login
- Hides credit card and email information to the merchant
- Affiliates tracking
