Report: Google's online payment service due this week

Google plans to begin testing publicly an online payment system this week, according to The Wall Street Journal.

Google plans to begin testing publicly this week its much-awaited GBuy service, letting users and company-watchers finally see how the company plans to attack the online payments market, according to The Wall Street Journal.

Google acknowledged more than a year ago that it was working on an online payment service, and high-ranking executives have discussed it in general terms over the past 12 months.

Earlier this month, RBC Capital Markets financial analyst, Jordan Rohan, said in a report that Google planned to launch GBuy on June 28 as an online payment platform for its advertisers. Meanwhile, The Journal is reporting that to entice buyers to try GBuy, Google will offer them rebates on their purchases.

For participating advertisers, Google will place a GBuy icon next to the text ads it displays along with search results. When people click on such an ad and decide to make a purchase from that advertiser, they will have the option to complete the transaction using GBuy, according to The Journal. Google would charge advertisers a fee for the GBuy transaction service.

Google isn't new to online payments. It has employed such systems in its dealings with advertisers for years and recently began testing online payments in its Google Base listings service.

However, from the beginning, GBuy has been seen as a clear attempt by Google to expand into business-to-consumer e-commerce, a new area for the company, whose revenue comes almost entirely from online ad sales.

GBuy also potentially puts Google on a collision course with eBay's PayPal unit. In fact, many consider GBuy as a big motivator behind eBay's decision to enter into the wide-ranging partnership with Yahoo that the companies struck last month. Yahoo is feeling competitive heat from Google's forays into the world of Web portal services.

As described, GBuy sounds like a relatively standard online payment system, and Google's challenge will be to generate interest among merchants and buyers, a Jupiter Research analyst, Edward Kountz, said.

Google is a trusted brand for advertisers and users in the search engine world, but to transfer that success to GBuy, the service will have to be easy to use and very secure, he said.

"Any brand that can be turned into a verb for Internet usage -- to 'google something' -- indicates a level of familiarity that's very important. It's different to say that Google is trusted as a transaction platform today, but it could become trusted," Kountz said.

In terms of timing, GBuy comes amidst renewed interest in e-commerce and online payment systems, not only via desktop PCs but also mobile devices, Kountz said.

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Juan Carlos Perez

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