Google Wins Points with Retailers, But Consumer Reaction Unclear

The product has been available for only two weeks, but Google Inc.'s online payment service has already won considerable favor with at least some Internet merchants and companies that process online transactions. Meanwhile, some analysts caution that even if Google Checkout, the online search giant's name for its long-expected entry in electronic payments, is a hit among merchants, it will have to prove itself with consumers, as well, to be a success. “What we'll have to see is how many people will sign up with Google,” says Dan Schatt, senior analyst with Celent LLC. “It can potentially prove to be very successful depending on what people think about Google, if they trust it to hold their financial data.” In an interview with Digital Transactions News, Benjamin Ling, product lead for Google Checkout, would not say how many consumers so far had signed up to use the service, nor would he make any projections. But he did say the company is “pretty pleased with adoption.” (Digital Transactions News, July 10). Google launched Checkout, he said, because it wanted to alleviate what it saw as consumer frustrations with long and tedious first-time sign-up processes to make payments on e-commerce sites. On the acquiring side of the business, Google may have a clear winner on its hands if sources reached by Digital Transactions News are any indication. “We liked the Google Checkout package because it was fairly easy to integrate,” says Alicia Berry, director of operations at DVD Empire, a Warrendale, Pa.-based online store, in an e-mail message responding to questions from this newsletter. Berry is a skeptic of so-called alternative online payment methods (Digital Transactions News, June 9), but Google won over DVD Empire, she says, with “Google's brand name, their willingness to work with us, the high level of communication between us and them, and [the fact that] they take very little of our real estate.” DVD Empire is a client of Google's AdWords advertising service, which played a big role in the retailer's decision to accept Checkout. Large users of Adwords can get considerable discounts on Checkout processing costs, with Google offering free processing on $10 of sales in the current month for every $1 they spent on AdWords, which charges per-click, the previous month. Its ordinary transaction rate is 2% plus 20 cents, which Berry also finds attractive. “Their transaction fees are low, sometimes lower than our current gateway, and there is little risk of chargebacks,” she says. Bill Tait, chief executive at Mercantec Inc., a Naperville, Ill.-based provider of shopping-cart software, says “several dozen” clients accessed E-Commerce Express, a new hosted service he offers, in the first several days after Checkout's June 29 debut. He attributes this traffic to Checkout, which Mercantec has integrated into its products after starting talks with Google last fall. Like Berry, Tait says the Google brand carries weight, especially with the small merchants that use products like E-Commerce Express. Google has introduced a payment mark, in the form of a tiny shopping cart, for Checkout. “The real benefit [merchants] are seeing is that icon,” he says. “A real problem [for small merchants] is that the consumer will pay $10 or $20 more to buy that book from Amazon.” Google Checkout, he says, “will help establish trust and convert more browsers into buyers.” Still, Google may have some work to do on the merchant front. Berry says with Checkout her customers can't modify orders after they place them, a problem she calls a “major drawback” because DVD Empire has differentiated itself in the fiercely competitive online movie business by allowing customers to change orders up to the point the order ships.