Google Checkout to Integrate with AdWords

  |  June 29, 2006   |  Comments

The long-rumored PayPal rival sees the light of day.

Google's long-awaited payments service, dubbed Checkout, is set to be launched today. The offering is integrated with the company's AdWords program, displaying an icon on participating advertisers' ads and giving them a discount on payment processing.

Citibank has partnered with Google to co-market the product, offering users of its credit cards reward points if they sign up for accounts.

"This helps complete a cycle for our users so they can search, find and buy quickly," Benjamin Ling, the lead product manager for Google Checkout, told ClickZ News.

Speculation about the system has swirled for months, with much ink being spilled over its potential to threaten eBay's PayPal. Though Checkout shares many characteristics with PayPal, in that it enables small merchants to accept payments on their sites, the Google service doesn't enable person-to-person transactions and doesn't let consumers have a cash balance in their accounts. It also doesn't have shopping cart features yet. Still, Google will be battling PayPal for consumers' trust, and also for the small business market.

In that fight, Google's ammunition will be its integration of Checkout into its AdWords program. Checkout-enabled merchants who buy AdWords will get a shopping cart-shaped icon that appears on the bottom left-hand corner of their ads, in a move designed to assure customers they can trust the check-out process at the advertiser's site. Those icons will only appear on sites and not on AdSense affiliate sites.

Additionally, AdWords advertisers will receive free payment processing for sales of up to 10 times their monthly spending. A company spending $1,000 in one month for AdWords would receive $10,000 worth of free payment processing the next month. Beyond that, or for non-advertisers, the charge will be $0.20 and two percent of the sale per transaction. PayPal charges 1.9 percent and $0.30 per transaction.

"It's intended in part to create a reward, a loyalty, for the AdWords advertiser," said Greg Sterling, an analyst with Sterling Market Intelligence. "It will also encourage merchants who aren't AdWords advertisers to try it."

Though the service would seem to be most appealing to smaller merchants who may not have a trusted brand name, Google has signed some well-known brands to participate at launch.,,, and will offer users the option of using Google Checkout.

From the consumer side, Google Checkout is aimed at providing people the convenience of entering in their credit card and personal details once, then using them across a variety of merchants. Consumers can also track the status of their orders, including shipping information, from within the Google Checkout interface. They can also rate their buying experiences. For now, this rating information is simply being routed back to merchants, but Google says it is exploring how to make that information public.

One relatively minor feature within the Checkout process may turn out to have implications for marketers. The interface lets consumers create a merchant-specific email address that forwards to a Gmail account and can be turned off at will. The theory behind this feature is that users are hesitant to give their real email addresses to little-known online merchants, for fear of receiving spam. Consumers can opt-in to merchants' email marketing programs using this address from within the Checkout interface, as well.

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Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

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