Google launches online payment service

Search giant Google Inc. plans to launch a long-anticipated payment system for Internet purchases as the American multinational software corporation, attempts to wriggle into all facets of life online.

The largest internet search company in the world, which is set to compete with auction giant eBay, introduces the online payment system dubbed Google Checkout, designed to boost Google's main source of revenue; selling advertising.

eBay unit Paypal is the market leader in online payments, and eBay stock has slipped ahead of Google’s Checkout launch.

Google Checkout will provide some free order processing to Google's millions of advertisers; however, it will initially be available only to shoppers in the US.

This service will let Web shoppers save their credit card and shipping information in a Google account, and then quickly purchase products from participating merchants, including Starbucks Corp., Jockey.com Inc. and Buy.com Inc.

Google asserts it will enable shoppers to set up a single account with all their credit card and delivery details, allowing online merchants to sell through their Google advertising. For each dollar they spend on advertising, merchants will get $ 10 off the cost of processing orders they receive.

Google Chief Executive Eric Schmidt has usually said that Google searchers are only one click away from defecting to competing services. Storing their credit cards in Checkout ties them a little more closely to the company.

About the relationship between the shoppers and Google through the novel service, an Internet analyst Greg Sterling said, "There's a convenience and loyalty" involved in the relationship. But, at the same time, Sterling said, "It's not going to kill Paypal," adding that there was room in a market long dominated by Paypal for several such services.

A spokeswoman for eBay's PayPal unit said the major online auction and shopping company does not comment on opponents' products, but she observed that PayPal processed $ 27.5 billion in transactions last year. During the first quarter of 2006, one-third of PayPal business was conducted through merchants including Apple Computer Inc. and Dell Inc and the rest was on EBay itself.

In the meantime, Google inked a deal to have Citigroup Inc.'s Citi Cards promote Checkout on its website and encourage its credit card shoppers to use the service by proposing reward points or cash back for signing up.