Holiday 2006 Grudge Match: Google Checkout Versus Paypal

Google Steps More Boldly Into PayPal’s Territory by the New York Times shows how Google Checkout has really stepped things up this holiday season.

The article covers how Google is giving merchants huge incentives to promote Google Checkout on their online stores. One merchant sent out a promotion to customers, telling them they get $10 off all orders of $30 or more if they use Google Checkout. He said his traffic tripled and it cost him nothing, since Google is paying the bill (he gets reimbursed the $10 per order from Google) and Google is also offering zero transaction fees until the end of the year.

GSI Commerce, a company that runs about 60 online stores, said that of PayPal, BillMeLater and Google Checkout, Google is leading the pack this holiday season.

Analysts predict it will cost Google $20 million in the current quarter for these promotions. But Google is doing this because it helps their advertisers close transactions quicker and it will eventually allow Google to offer a CPA (cost per action) model. I can tell you, I personally bought around 10 items through Google Checkout in the past month because of these promotions.