Google is expected to unveil its online payment system on June 28, a long-anticipated service that will compete with eBay’s PayPal, according to an analyst’s report issued on Friday.

The new system also allows the search giant to determine what products and services get the most hits, a feature that will help Google adjust online ad rates in response.

Called GBuy, the system will process payments between shoppers and merchants, RBC analyst Jordan Rohan wrote. Moreover, he said, GBuy could eventually expand to handle consumer-to-consumer payments.

“GBuy has the potential to be as important to Google as Google Maps or Google News, and there is very little that competitors can do to thwart its success,” Mr. Rohan said.

During GBuy’s beta phase, he noted, Google will not charge merchants service fees. But later, the company likely will charge a fee of 1.5 to 2 percent of each transaction―similar to, or slightly less than, what PayPal charges.

On its search result pages, Google will designate each merchant accepting GBuy as a “trusted GBuy merchant,” to encourage consumers to view the merchant as safe, and thus, increase click rates.

Higher Merchant Charges

More important for Google, GBuy is another way for the company to charge merchants more for advertising. The payment system captures all transaction data flow, and lets Google see which categories and keyword bids produce the most hits and sales.

“If harnessed, the precision of this targeting could be revolutionary,” Mr. Rohan said.

To be sure, he noted, some merchants will resist allowing Google to view all their transaction information, but they won’t have much choice because Google would also drive more traffic to merchant sites.

“It may direct more clicks to the merchants that offer GBuy, much in the same way the eBay’s feedback loop drives higher auction prices for those Power Sellers with high customer approval ratings,” Mr. Rohan said. “In short, offering GBuy will increase the efficacy of search for GBuy merchants, making it too profitable to resist.”

Google didn’t respond to inquiries about GBuy.

Mr. Rohan did not indicate whether GBuy is a new and expanded version of Google Base, an online payment system rolled out to select merchants in February.

Mr. Rohan has a 12-month stock price target of $465 for Google. In mid-afternoon trading on Friday, shares of Google traded down $4, or about 1 percent, at $389.28 on the Nasdaq.

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