Google to Launch PayPal-like Service — eBay sez Oh-Oh

Assuming chatter about Google’s plan to launch a PayPay-like payment service is correct, it is seismic stuff. It will transform the payment business, making eBay a near-term short. After all, PayPal represents something like 25% of eBay’s revenue, and at least as high a proportion of profits.
If Google is successful in creating a wider payment system, one that boxes PayPal out with Google’s broader footprint, then eBay will find the ground shifting underneath it in a big way. Not only that, there continues to be buzz that Gooogle will launch a classifieds service, putting eBay and Google at each other’s respective throats in more markets than payments.

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  5. The (Invisible) eBay Economy

Comments

  1. “After all, PayPal represents something like 25% of Google’s revenue…”
    I believe you meant “eBay’s” revenue.
    Feel free to delete this comment once you’ve made the change.

  2. Stan Kanarowski says:

    Good points. I might add the following: the SJ Mercury News ran the google article on Saturday, making it almost certain they enter this space. Paypal is an extremely effective service especially, for auctions. It enables ebay to capture a share of many small business or person to person transactions that skip their system or exist outside of their system. Transactions that can now be facilitated without the needs of more advanced Visa/MC setups, relationships and most importantly enable fraud detection.
    Perhaps the real holy grail, is the First Visa/Mastercard/Amex/First Data monopoly. The payment processing system is archaic and could use an overhaul. The fee structure is such that every merchant is paying 2.2%(1.5-2.75% for mail order and internet) on every transaction, most folks have little leverage as the terms are dictated by the above powers. [wal-mart sued MC/Visa about debit cards as they were building MC/Visa debit card business while donating 1.5% to the monopoly]. Let’s say Google does $10B in 08 of which 80% is paid by credit card meaning they are paying perhaps $160M in processing fees. If they can develop a service where the fixed costs are a third of this, the rest goes $106 can be split between the bottom line and users which are offered a better solutions. So in house they can easily justify developing this service. Now take this out of house and offer a next generation payment structure (traditional but also internet/cellphone/wireless devices/RFID/Wimax) that is more efficient for consumers and merchants and there are billions in revenues out there.
    Clearly if Google is going to enter the classifieds, auctions, sales facilitation business offering a payment system with their offering can’t hurt. So this is where they are competing against Ebay, Craigslist, Shopping.com, shopping.yahoo.com, citysearch.com, non existent dominant mobile phone solution, Godzilla.com(laughing all they way to the bank), etc. If they are successful, which I suspect they will be (Froogle is just a tease), they are going to expand the market(pie) and not take away share from the others, this could substantially change or enhance the way products are sold. Right now if you want to sell products on line you can either 1) buy traffic through Google 2) list your commodity products in a product search engine like shopping.com, shopping.yahoo.com, msn, AOL 3)Sell your products directly through Ebay, amazon.com or half.com 4)or pray/spam that some one is going to come to your site or visit your site again after you customer acquisition cost was above your gross profit dollars on the last products you sold. If Google is successful they could either help paypal with new growth they haven’t counted on or develop something in house to capture a larger share of the process.
    I think Paypal is a great company and they are expanding quickly outside of the auction space/online person to person space. Yet the market I see google going after is so much more I don’t think this substantially slows paypal’s growth it just limits there growth potential. It should be pointed out that paypal started originally as a system to pay for products by palm pilot(now cellphone). There are still huge opportunities that paypal has not focused on, as they have instead done a focused job in person to person, small business payments. Any launch by Google will be unlikely to affect Ebay’s profit in the coming quarters unless Google goes straight after person to person auctions.
    I personally think this could be big for Google if they go after the ‘monopoly’, they are smart enough and are positioned properly to do so, let’s see if they can execute it over the forth coming years. If they don’t perhaps paypal does, in a way that folks really are focusing on right now.

  3. Gabe says:

    I’m curious: why are you linking through shrinkster? This prevents technorati searches on the WSJ article from finding you. IMO, this outweighs any possible advantages. Am I wrong?

  4. Paul K. says:

    Sigh, a complicated reason. At first the article was behind the WSJ subs-only wall, so I mailed it to myself using the “Email this” button, which opens the article up to other readers for a few days. But since the URL is so long I typically use Shrinkster to come up with something smaller. Maybe I should skip the Shrinkster step …
    P.

  5. Gabe says:

    OK…well, FYI, I ask as someone who’s building a tech “news” site that works best when people link directly to the things they’re discussing. I probably ought to account for this indirection with more engineering, but in the meantime I’ll just complain when I see it. :)

  6. Ken says:

    Google already operates a massive multi-billion dollar electronic payment system called “Adwords”. It makes a lot of sense for them to take all that infrastructure and repurpose it as a generalized electronic payment system.

  7. TechCrunch says:

    Profile: Google Wallet

    Company: Google (Wallet)
    What is it?
    This hasn’t launched yet, but there is some buzz around the blogosphere (and the Wall Street Journal) that Google is planning on launching a competing payment service to PayPal.
    Is this Web 2.0? I thin…