Google readying PayPal rival

By Matt Whipp

Posted on 20 Jun 2005 at 12:48

Google is to start an online payment service to rival PayPal, according to reports.

The New York Times (NYT) says it has heard from an online retailer claiming to have been approached by Google to participate in the scheme. It also claims another industry insider reported having heard of such a service under the moniker Google Wallet.

And at an investor conference on Friday the Wall Street Journal also reported the initiative came under discussion.

Google has also earlier filed documents with the SEC to establish the Google Payments Corporation.

Quite what the service in its final incarnation will look like, no-one, including Google, is willing to say. Online portals such as Amazon and Yahoo offer 'wallet' services that store credit card details safely in one place so that customers don't have to type them into each online shop they buy from. But the NYT's sources say the Google deal will be much closer to PayPal, which hooks accounts to credit cards so that users can pay individuals as well as merchants and can transfer money in and out.

Google currently makes its money from advertising within its hugely popular search service. Its Froogle service searches online stores for the best price on a given product, but its own payment service would be a significant step forward from that.

It has engaged heavily in building and finding out about its userbase, most notably in offering the free Gmail webmail service with 2GB of storage.

But should it successfuly establish Google Wallet as a popular way to pay with its users, it will be able to make money by charging fees for payments and other transactions in the same way PayPal does. It will also have to hook it into a service that requires such a payment method, such as eBay. But with eBay having bought PayPal two years ago, it is unlikely to be a ready customer.

Yet rumours around Google launching a classifieds service are already long in the tooth, so perhaps the company has already explored some way down that road.