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Google plans Paypal-type payment service
grobe




msg:1237063
 1:24 pm on Jun 18, 2005 (gmt 0)

[seattletimes.nwsource.com...]

Apparently more information is available on the Wall Street Journal site. Anyone a subscriber there and can thus provide more information?

 

Shak




msg:1237093
 11:45 am on Jun 20, 2005 (gmt 0)

I think the fact that Google is able to bill and pay small and large quantities to web users across the globe using the Adsense and Adwords systems indicates they have built up a lot of experience in this field.

BINGO ...

Google has 1 of the best banking network contacts in the world, from CEOs to Govt agaencies, they have already done most of the hard work required to set this up...

Shak

fearlessrick




msg:1237094
 1:22 pm on Jun 20, 2005 (gmt 0)

Google is not going to start their own payment service. That is only a well-placed rumor intended only to make ebay quake in their boots.

Ebay is a buyout condidate and the brass ring is PayPal. G needs a payment service, so why would they spend billions to develop one when they could easily spend stock (free money) to buy ebay.

In case you haven't noticed, Google's been oogling ebay for some time and they're not about to compete with them, they're about to buy them. It's a natural fit. Google's Froogle is still in beta, never really functioned perfectly and ebay still leads as a commerce platform.

To those who say PayPal doesn't work, etc., try finding an inexpensive money handler that does. They are miles beyond the competition. I'm not a big fan, but use them all the time and am relatively satisfied.

Google will buy ebay before they launch their own payment service, or, if they do launch a payment service, it will be mostly for show and to lower the bid price on ebay.

econman




msg:1237095
 2:46 pm on Jun 20, 2005 (gmt 0)

I strongly agree with the view that the lack of a viable micropayment system has distorted and limited development of the web to date. If and when micropayments become feasible and cost effective, it will greatly change the web, because it will provide an alternative and/or supplemental method for supporting development of high quality content.

---------------
Some quick background for those who haven't thought much about this:

A major factor in the evolution of the Web is Electronic Commerce: the ability to buy, sell, and advertise goods and services to customers and consumers. One concern... [is] trust ...Another concern is the need for low friction commerce transactions
source: [w3.org...]

Micropayments provide an alternative revenue source for content providers (initially of text and pictures, presumably multimedia later on) beyond advertising and subscriptions. Micropayments may also provide revenue streams for service providers (database lookup, proxy services etc.).

Currently, there is no clear definition of a "Web micropayment" that encompasses all systems claiming to be micropayment systems. However, these systems all share the goal of minimizing the cost overhead of a single transaction. Most of these micropayment systems try to save costs, including financial risk-management costs, operational costs (including communication, processing, storage), and set-up costs.

Most micropayment systems also try to provide a simple user interface, especially making buying as easy as possible. We believe that to pay a small amount for content or services, the user should use the same user interface metaphor as for regular web content: just click on a hypertext link.

Namely, micropayment content shall be reached by clicking on special, new sort of links, which we call per-fee-links. Many of the existing micropayment systems do follow this approach, however each of them is using its own proprietary method of creating a per-fee-link and encoding the vital information in the per-fee-link.

Source: [w3.org...]

-----------------

My argument for the importance of micropayments is as follows:

Most successful off-line information providers generate their revenues from two sources: advertisers and viewers/readers.

Dual revenue sources are relied on by the vast majority of newspapers, magazines and television channels, and most especially niche media that focus on narrow/specialized topics. The explosion of channels offered on US cable television would never have happened if those channels were forced to rely entirely on advertising (or, for that matter, entirely on pay per view payments).

Due to the lack of a viable system for micropayments, web sites have been forced to rely entirely on advertising (and/or direct sales of merchandise and services). Absent a set of standards, and accompanying infrastructure, there is no cost effective/feasible method by which websites can ask users to pay a tiny amount for a small amount of information. Transaction costs incurred by the website and the user (time and effort required to fill in a form, provide a credit card number, etc.) are overwhelmingly large, compared the the value of the information typically being sought at any one moment.

For all but a tiny handful of providers (e.g. the Wall Street Journal) requiring payment of a monthly or annual subscription doesn't solve the problem, because it conflicts with the way users like to gather information on the web: they like to "browse" and "search" for their information using a wide variety of different information sources, rather than always relying on a small set of services to which they have previously subscribed.

Visualize a system where certain links in Google's SERPs, (or anywhere on the web) have been flagged as "microfee per click" links. Users would know that it will cost them a tiny amount -- say, 1 to 10 cents -- if they click on the link.

Needless to say, such a system would greatly benefit content providers, particularly in topic areas where it isn't easy to generate income from advertisers (sites devoted to poetry, ballet, chess, politics...).

The ideal micropayment system would also provide a mechanism by which users can "vote" whether they thought the site was a ripoff, or if it provided information of high enough quality and quantity to justify the per-click microfee. That way, other users who are wondering whether to click on the microfee link have a basis for judging whether to do so or not.

Another idea that would make such a system work well would be to provide some sort of "money back guarantee" in which users would be given the option of not paying the microfee if they felt the site didn't provide good value for the (tiny) fee.

All of this fits very well with Google's core strengths, as well as their existing business plan, so there is reason to think they very well might decide to tackle the concept -- a concept that has great promise, but which so far no one has successfully solved.

jattfx




msg:1237096
 4:41 pm on Jun 20, 2005 (gmt 0)

some of you are saying that google and pp has been working together for a while or google is going to buy paypal. I fail to believe this because adsense nor adsense has paypal as the payment method yet...

tntpower




msg:1237097
 6:43 pm on Jun 20, 2005 (gmt 0)

Regarding MicroPayment, I think it's a good idea to use your celllar phone to pay.

Slone




msg:1237098
 7:43 pm on Jun 20, 2005 (gmt 0)

Careful
"Add your link: [GooglePay]" :)

walkman




msg:1237099
 10:49 pm on Jun 20, 2005 (gmt 0)

great move if you ask me. Everyone, but eBay wins. It might not have the profit margins of Adwords, but it's guaranteed money, and from a different source. Even if ads dry up for a short period, people will always buy online and send money, softening the ad drop impact.

I never understood why Amazon didn't do their own. They have the system..

blaze




msg:1237100
 3:05 am on Jun 21, 2005 (gmt 0)

I agree. eBay needs a search engine partner. Google is a perfect fit.

Yahoo and MSN would have a very hard time passing anti trust muster.

Google would have a few challenges as well.

However, I have to say, both Amazon and eBay desperately need to partner with a search engine.

Google, fortunately, hasn't invaded their space too much so might be able to pull it off.

I believe this is why people are bidding up the stock so high so soon after a pricked bubble. Cause if it is on Google revenue alone.. look out below!

walkman




msg:1237101
 3:15 am on Jun 21, 2005 (gmt 0)

>> Ebay is a buyout condidate and the brass ring is PayPal. G needs a payment service, so why would they spend billions to develop one when they could easily spend stock (free money) to buy ebay.

Yeah, why spends tens of $millions for a PayPal clone, when you can spend $50+ Billion to buy eBay. Are you kidding?

blaze




msg:1237102
 6:48 am on Jun 21, 2005 (gmt 0)

Google is in a race against microsoft.

With paypal at their back, that race will be a lot more one sided.

Besides, it's not 50 billion for paypal.

eBay *does* make money, after all.

morpheus83




msg:1237103
 10:30 am on Jun 21, 2005 (gmt 0)

Really looking foward for Google's service. Paypal was good and easy but when it came to customer service it was terrible. Hopefully Google will cover all this.

econman




msg:1237104
 10:59 am on Jun 21, 2005 (gmt 0)

There are two big challenges which have been holding back the potential for a system of micropayments:

1. the need for an industry standard which is universally recognized and accepted by millions of websites and users;

2. the need for a cost effective technology which can deal with billions of transactions with an overhead cost of no more than a penny per transaction (preferably much less).

Google is in a perfect position to overcome both problems, by virtue of their prominent position in the web and by virtue of their existing ability to track enormous numbers of transactions cheaply (e.g. the "conversion tracking" and other types of reporting they perform for their advertisers). Plus, they already have an established financial relationshiop with milllions of websites through their adsense and AdWords programs.

The piece that is missing from Google's perspective is figuring out a way to introduce millions of users eople to the concept of micropayments, and to convince them to transfer a few buck from a credit card into a micropayments account. (a chicken and egg problem).

If google can establish a system that initially competes directly with paypal, targeting larger web transactions rather than the micropayments concept, they don't need to make any money in that market. The venture would be fully justified just for the experience and momentum it would give them toward overcoming these challenges, both with respect to the financial part of the technology challenge (building ties to banks and credit card firms, etc.) and with respect to the consumer acceptance problem (getting consumers used to the idea of having an account with Google).

Google has shown a willingness to pursue various ideas with long term strategic potential even if there are no short term profits in sight (Google news, maps, etc.) Unlike these other ventures, however, micropayments is a concept with huge potential which has never really been solved. If they are willing to invest in the concept, it could have a huge payoff for them, and for webmasters generally, down the road.

kapow




msg:1237105
 11:13 am on Jun 21, 2005 (gmt 0)

The first serious provider to make this easy and cheap will have the world at their feet. There are zillions of folk who want to do online business but don't because they need a consultant to help them accept payment online. There are millions of serious businesses that have online payment but want an easier or cheaper payment provider.

- If the payment provider makes me advertise their service all over my site they can forget it.
- If they charge X to setup, Y per month, Z per transaction, Q when the moon is full... I'm looking for an alternative.
- If they make my customer jump through too many hoops and do a dance, I'm looking for an alternative.

Transactions in demand:
- Regular repeat payments e.g. for subscriptions, hosting etc.
- Single small payments.
- Single large payments.

The first serious provider to make this easy and cheap will have the world at their feet. The rest of the payment providers will quickly follow, but they will always be seen as followers of the leader.

justgowithit




msg:1237106
 2:18 pm on Jun 21, 2005 (gmt 0)

“The first serious provider to make this easy and cheap will have the world at their feet.”

That may be true, but it’s very unlikely that the provider will be Google. PayPal, Google’s proposed service, or any other wanna-be merchant account services has a long way to go. If these services ever start to catch on you can bet that the “real” electronic payment giants will jump in the arena and snuff the competition pretty quickly. I doubt First Data, NOVA, or NPC is all that concerned at the moment.
It’s interesting that nobody has mentioned PayPal’s recent moves toward more traditional ACH processing.

zomega42




msg:1237107
 3:09 pm on Jun 21, 2005 (gmt 0)

After this announcement, I doubt there is any way Google is buying PayPal/eBay.

The announcment that Google will have a payment gateway hurts eBay stock, which, if they are a planning to buy eBay is (a) stupid, why hurt a company your are planning to buy, and (b) illegal, you cannot manipulate the market by making an announcement that lowers a stock price, then buy all the stock.

There may be ways around this, but if they were planning to buy eBay, why announce this payment gateway beforehand?

walkman




msg:1237108
 12:24 am on Jun 22, 2005 (gmt 0)

"Google CEO: We're not going after PayPal"
Exec confirms electronic payment product is in works
[msnbc.msn.com...]

econman




msg:1237109
 1:37 pm on Jun 22, 2005 (gmt 0)

It could be coincidental, but the latest statements from Google are fully consistent with the micropayment concept mentioned earlier in this thread -- an efficient system that makes it effortless for users to pay tiny amounts to website owners for access to small amounts of content.

[theregister.co.uk...]

"Google's chief executive has confirmed that the firm is looking at online payments but it would not be competing directly with PayPal....

Eric Schmidt, chief exec at Google, told Reuters: "The payment services we are working on are a natural evolution of Google's existing online products and advertising programs..."

blaze




msg:1237110
 11:09 pm on Jun 22, 2005 (gmt 0)

Seeing a lot of "MSN Shopping" ads in eBay.

Wonder if this is a shot over the bow warning Google to stop messing around.

crisscross




msg:1237111
 8:47 pm on Jun 29, 2005 (gmt 0)

Econman: The piece that is missing from Google's perspective is figuring out a way to introduce millions of users to the concept of micropayments, and to convince them to transfer a few buck from a credit card into a micropayments account. (a chicken and egg problem).

It's called the Google Toolbar.

Virtualpixels




msg:1237112
 1:52 pm on Jul 4, 2005 (gmt 0)

Are you stating that Google will store and track micro-payments using their toolbar?

pontifex




msg:1237113
 9:56 am on Jul 19, 2005 (gmt 0)

hi,

i doubt we will see electronic money beeing stored "crypted" on a clients PC, not with the toolbar, nor with any other "wallet" technology. If someone comes up with an encrypted storage of money locally (purely local), I turn around and get me a 64 nodes Athlon number cruncher cluster to crack that and add a few zeros to my account :)!

i guess it will be something like PayPal, but maybe without the speed issues and other complications (like: if you are a webmaster, who has recieved money via wire, you are verified by default, etc.)

if google will come up with the same procedure as paypal, but without the little problems they have technically, google will have a profitable service within 18 month...

too bad, they are not responding to any emails regarding this topic. i really want to be in the loop for beta testing and for developments.

further i agree with "justgowithit", that the big networks did not even bother with the little niche "internet-only-payments", because their processing networks are used anyhow to conduct payments with VISA, MASTERCARD, etc, no matter if it was done online or not...

Small online payments for digital goods is still a problem. If you go with credit cards, you have to "register" your single products (eg. 2co):

I want to see a musician, registering 200 songs to sell each of it for 49 cents and paying a 40 cent transaction fee! That is not good yet!

Using PayPal for that is OK, but not A+, because of all the hassles you have go through until you are setup!

So, I am quite excited about Google going into that and I can't wait to get the specs!

my 2 cents,

P!

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