2/26/2006 1:23:59 PM, by Eric Bangeman
When a beta of Google Base was unveiled last fall (with the attendant AYBABTU jokes), we observed that Google also had a payment service in the works. Once Google took the wraps off of the Google Video Store, we saw how that payment service worked: using your Google Account, you would be able to save your credit card information so you could easily purchase NBA broadcasts, TV shows, and other content available from the video store.
In a recent update on Google's payment plans, the search giant said that one of its aims with Google Accounts was to make it possible for its users to pay for items online. Google appears ready to take the that step, allowing users to buy and sell on Google Base by using their Google Accounts. A handful of sellers on Google Base will be able to accept payments for items listed on Google Base. According to the Google Base blog, the company plans to start small and gradually increase the number of users and listings available for purchase via a Google Account.
This is good news for those who love Google and don't mind contributing towards the company's goal of indexing everything there is to be indexed. But for a company like eBay—which owns PayPal and 25 percent of Craigslist—this is very bad news indeed. For all of its success—eBay has crushed nearly all the competition in both the online auction and consumer-to-consumer (C2C) payments space—it could be vulnerable if another company with the financial wherewithal and infrastructure to challenge its business model came along.
Think of all the eBay Stores and listings with Buy It Now prices. eBay has made the whole buying and selling process quite simple for both buyers and sellers with that feature and its integration of PayPal payments into its listings. However, the company always wants its cut for both selling the item and processing the payments. That adds up. The combination of Google Base and Google Accounts should prove to be a very attractive alternative to high-volume sellers who use eBay as a storefront, especially if Google takes a smaller cut of the transaction than does eBay. Craigslist traffic could also suffer as sellers move their listings to Google Base, especially with Google Base's broader reach than Craiglist's city-specific focus.
eBay-owned PayPal will take a hit, too. Naturally, eBay auction and storefront traffic that migrates to Google Base will result in a drop in PayPal usage. Beyond that, the fact that Google has built the back-office infrastructure necessary to run a C2C payment service should be very troubling to PayPal. Although payments using Google Accounts are currently limited to Google's own products and selected Google Base listings, Google could very well expand the reach of Google Accounts beyond that. Will people be "Googling me the money" instead of "PayPaling" it in another year?