LifeinAsia - 7:42 pm on Feb 8, 2006 (gmt 0)

With the eBay/PayPal relationship solidified, GBuy/Google seems like a natural progression.

Google currently has several payable services (AdWords, AdSense, Google Video, etc.) in addition to their (currently) free offerings. Moving to their own finacial system would dramatically cut their transaction costs. It would also allow them to setup a system for micropayments.

Here's a basic example (these numbers are example ONLY and do not reflect real-life numbers for me.). Let's say I don't live in the U.S., but have an AdWords account and spent $190 in advertising last month. Google charges my credit card for $190 and has to pay ~3.5% in transaction fees (because it's a non-U.S. credit card). I also have an AdSense account that earned me $200. Google cuts a $200 check and pay the postage to mail it overseas. I decide I want to buy $10 worth of stuff in Google Video. Again, I use my credit card and Google pays another 3.5$ in transaction fees.

With GBuy, this scenario would result in 0 revenue/income for Google ($200 = $190 + $10) and minimal (if any) transaction charges for Google. Currently, instead of breaking even, Google ends up losing somewhere around $6-7 on this set of transactions.