GBuy vs. PayPal

Mylene Mangalindan at the Wall Street Journal reports that Google is working on a payment system called GBuy that will allow customers to buy from merchants through Google:

For the last nine months, Google has recruited online retailers to test GBuy, according to one person briefed on the service. GBuy will feature an icon posted alongside the paid-search ads of merchants, which Google hopes will tempt consumers to click on the ads, says this person. GBuy will also let consumers store their credit-card information on Google.

There was a rumor seven months ago that Google was developing a payment system called Google Wallet. Since then, Google Wallet appears to have been used for payment internally by Google for Google Video and other products. Now, it appears that Google Wallet may be about to drive a new external fixed price marketplace, GBuy.

This seems to be part of an ongoing trend where Google gets further and further into eBay's business. A year ago, Bambi Francisco at CBS Marketwatch reported:

Will search advertising ultimately become a better mousetrap for sellers? Or to what extent will search advertising take away the potential dollars that were once expected to flow onto eBay's marketplace?

As one eBay seller said to me via e-mail: "Most sellers are like me and didn't really think there was life outside of eBay, but we are getting educated fast."

Another seller said he's decided to put up his own Web site for $19.95 per month and buy keywords on Google and Yahoo's Overture.

"Products on Google are not under as much pressure as eBay so you can typically get 5 to 10 percent more for your products on Google."

Already, many small merchants sell directly using Google AdWords to direct traffic to their site. But, closing the transaction has required setting up a website and payment system, and customers often don't like entering their credit card on small merchant websites.

Now, with GBuy, Google may be able to cleanly handle the entire transaction, no fuss, no effort.

[via Inside Google]

Update: A month later, Barry Schwartz is part of a closed beta test of Google Payments and says, "The best way to describe Google Payments is calling it a PayPal alternative."