Google Checkout -- the Unofficial Blog

EBay & Co. See Growth In User Base. Yahoo Is Awarded a Patent for a Peer to Peer Payment System

A Red Herring story talks about a 24% increase in earnings for eBay this year compared to same period last year. The article has some interesting subscriber numbers for the group's three pillar businesses: marketplaces, communications, and payments:

• eBay's user base jumped to 192 million from 147 million a year ago (this does not include the other smaller marketplaces owned by the company)
• Skype has 94.6 registered users
• And finally PayPal's registered users crossed the 100 million milestone to reach 105 million from 71.6 million same time last year.

In other news bloggers are reporting that Yahoo! yesterday was awarded a patent that seems awfully similar to PayPal. The invention covers "Systems and methods for implementing person-to-person money exchange".

People are speculating that this might herald a new entrant (or re-entrant) to the online payments field. But the patent was filed 6 years ago in August 2000 and therefore I tend to think that it tells us little about the company's current plans and more about their strategy back then.

Also the fact that it took 6 years to get the patent either points to an inefficiency on the part of the USPTO, the agency responsible for awarding intellectual property rights, or an overambition on the part of the patent filers. In the latter case Yahoo lawyers/engineers would have started out with a filing that covered too much and then had to take their filing documents back and forth removing or rewording some claims until the patent agent finally agreed that Yahoo's described peer to peer payment system is actually novel, useful, and nontrivial.

I'm Attending Canada on Rails in Vancouver, BC

Tomorrow morning I am flying to Vancouver, BC to attend the Canada on Rails conference.  If any of you who are reading this blog are going to be there too then email me and we'll meet up (david.haddad@gmail.com). I can't wait to dip my feet in the Pacific!

Whatever it is, you can get it on Google

Soon after Google released its Google Maps application Paul Rademacher hacked through its code and created HousingMaps, a website that integrates Craigslist with Google Maps. Google liked Paul's work so they hired him and released a public API to enable other people to create similarly useful mashups. The move unleashed a ton load of creative work most of which is documented on the blog Google Maps Mania. Today this same blog highlighted a new Google Base service that lets users search for apartments with the help of maps. The site is very similar to Paul's original HousingMaps with the only difference that it incorporates a multitude of small housing databases including sites like Citi Habitats, Postlets, and GothamMarket -- but not bigger databases like eBay or Craigslist.

Should eBay make its listings available on Google Base?

One argument says that everyone should opt in to Base because the move would generate leads and drive traffic to one's site. A small company like Postlets would get the extra exposure that it needs to get off the ground and gain a following. A big league company like eBay is already spending a considerable budget on paid placement ads and would also benefit from some free exposure.

But let's look at the issue through a different lens. In European and Asian countries it's common to hear people say "MSN me". In that part of the world MSN Messenger is synonymous with instant messaging. Here in North America people say "Google it". Google is synonynous with search. Similarly, people also say "I got it on eBay". eBay is for many the first thing that comes to mind when someone wants to sell or buy online. It's sort of like a Pavlov reflex at the level of society.

Now take this scenario. eBay particiaptes in the Google Base program. eBay listings start to appear on Base. Consequently potential buyers would start to realize that it might make more sense to look for items on Google Base because the service gives access to ebay as well as other smaller marketplaces. In other words the eBay offering would become a subset of Google's. All other factors being equal, I would prefer to go shopping in the supermarket that offers more products from more suppliers. Three or four years into the game people's attitude toward eBay would change. And Google would replace eBay as the first place that people go to to buy things.

There is also another reason why eBay would want to say no to the search company. As a rule of thumb cobranding benefits the lesser known brand. Google is a top global brand but when it comes to listings eBay by far dominates. An association between the two companies would benefit the newcomer to the listings industry and not the world's online marketplace.

Is There Room for a Payment Startup Alongside GPay & PayPal? A Peak Into ModaSolutions.

ModaSolutions is a payments company based here in Ottawa, Ontario. They work with banks and online merchants to enable customers to buy through their online banks. The company was founded by entrepreneur Marwan Forzley who was previously director of business development at Nokia. I was invited to meet with the startup company and talk to them about their ambitions.

A different way to pay
A typical e-commerce experiece requires you to fill out your name, cedit card number, expiry date, billing address, 3-digit security code, and sometimes your 'verified by visa' password. It's more convenient if you've already stored all this information in your PayPal or Google payments account. Then all you need is a username and password.

But buying through ModaSolutions' Secure eBill is different. At checkout you only give your name and email. The company then automatically figures out your bank details and sends you an electronic bill that you can pay through online banking.

Secure eBill's value proposition
Secure eBill is at the epicentre of a triangle -- sitting between merchants, banks, and customers.

For the merchant, Secure eBill has two important advantages. First, it's cheaper for a merchant to accept payments with ModaSolutions. The payment processing fees are lower because money is transferred via direct debit and not through the more expensive credit card network. As an example Secure eBill will cost the merchant around 1% of the product price with ModaSolutions versus $0.25 + 2.5% with Google Payments. Second, the merchants can target those internet users who have yet to buy online because of security fears. According to the CEO of ModaSolutions, this market segment is more likely to do ecommerce if the payment solution does not require them to submit any sensitive information.

For the banks, ModaSolutions offers them a chance to enhance their existing relationship with their customers. Many current payment solutions abstract the bank or credit card from the shopping experience. How? Well when you give PayPal your credit card information, and then again your banking information for the sake of verifying your account, you're making it more convenient for yourself to purchase online. Because from now on you have stored your financial information in a vault, and all you need to buy is email and pass. But credit card companies and banks aren't fond of products that create a layer between them and their customers. Secure eBill on the other hand acts as a complementor to the banks. It uses their direct debit mechanism while maintaining the relationship the bank's relationship with its customers.

For the end consumer, Secure eBill gives a semblance of a more secure transaction due to the fact that the only information required at checkout is a name and email, and everthing else happens through the bank. A recent study by Jupiter Research reveals that 48 million North Americans now pay bills online and this number is projected to reach 92 million by 2009. But for most people, the sense of security that comes from paying through one's bank is countered by the inconvenience of it. On average it takes about two days to process a payment through the e-billing solution currently offered by banks. This makes me wonder if e-billing might be a solution more suited to pay for utility bills and university tuition fees rather than for items purchased online.

Conclusion: safety vs. convenience
Like any solution out there Secure eBill has its pros and con. The fact that every purhcase has to be paid through the online bank is a double edged sword that gives the company its main strength and weakness. The battle between PayPal and CitiBank's c2it payment service has has shown that the success of a payment method relies in large part on choosing an acceptable balance between convenience and security -- a point in the graph that makes for a great user experience while at the same time keeping risk at check. And although the established payment companies might own the sweet spot that appeals to the mainstream, other lesser known companies might appeal to certain subsegments of consumers. ModaSuolutions belongs to the latter. I would keep it on my radar.

An Interesting Example of How Google Could Use Its Search Muscle to Push Payments

According to the folks at GoodROI, Google has started to experiment with a new tool that lets a user refine a search to a specific Google Base listing type. So for example if you go on Google.com and search for "homes for sale" you get a small box on the top that asks for the location, the listing type (prefilled to "housing") and a button that says "Search Housing". Update: Career search listings were also reported on SearchBlog.

This is an interesting example of how Google can use its core competency of search to leverage new services in a way that is helpful to the customer.

I would expect the company to follow a comparable strategy when it comes to their payment product. As an example when you search for "camera reviews" Google would display regular search results like shopping comparisons sites, official product pages, user reviews; but also some premium results maybe with a small dollar sign indicator. When you click on such a premium result you would be redirected to a page where you can buy the report and then view it on the publisher's site.

Google Payments Reading List

Google just released a new feature that lets you label and publish your favorite stories into a nice little table that you can add to your blog or personal site. See the result below:

Eric Schmitt Hints that Google Payments Might Add eBay's PayPal as a Payment Option

As many of you are aware, Google invited market analysts to their headquarters for the Google Analyst Day event that took place about three weeks ago.

There were a lot of intersting discussions that took place. But when it came to payments Eric Schmitt was the one fielding most of the questions. He was constantly reiterating that GPay (as he calls it) is not made to compete with PayPal or to replace existing peer to peer payment systems but that it's meant to be a new solution to a new problem.

He even went as far as saying that it will make sense at some point to add PayPal to Google's payment service.Here's the transcript:

Analyst: Bill Shatner from UBS -- First of all I would like to thank you for acknowledging and answering most of the 23 questions.

Schmitt: I think you're being too generous. I read your questions and I am not going to answer most of them in much too detail. [laughs]

Analyst: Alright so one more follow up that is a little more detailed.

Schmitt: Ok go ahead.

Analyst: On payments; I actually used it to purchase something from a Google employee through Google Base. And it doesn't allow you to use PayPal as an option  (only credit cards). That kind of goes against  [Schmitt interrupts]

Schmitt: By the way it makes sense to add PayPal at some point [...] That's a good user request. Our first Google Base Customer.

An Artist's Rendition of What GPay Might Look Like

You've seen screenshots of Google Payments and you might have an idea of how its look&feel might change in the future. But I bet you've never though that it would look anything like this.

Sightings of Google Video Ads. Payment Functionality to Follow?

I just read on GoogleRumors there have been some sightings of Google video ads. Do you see the "Ads by Google" note on the bottom right of the picture?

From the post:

We just spotted a video AdSense ad and after a quick Google search this appears to be new. The path from just text to full multimedia has finished (text->images->animation->Flash video). The ad in question appeared on entertainment centric site The Superficial and use the normal AdSense inclusion code for text/image ads. Screenshot follows:

That's an interesting development especially for companies like YouTube who I am sure have been eagerly waiting for a better way to monetize their site than through regular AdSense ads. I'd say that until this point the tremendous bandwidth costs they were incurring far outweighted the money that came through contextual ads (that are very often irrelevant).

A cool payment-related product feature would be to be able to click on a button at the end of the ad segment and be redirected to a page where you could view more information or buy the advertised product with your Google Account - similar to interactive TV where people can conveniently order a pizza after seeing the pizza company's ad during a mid game.

How a Small Google Project for Soccer Fans Might Evolve into a Standalone Single Sign On Product

Nathan Weinberg from InsideGoogle wrote an interesting story yesterday about Joga.com, a joint venture between Nike and Google. From the site: "Joga is a place to meet other soccer players, share your own soccer experiences and enjoy photos and videos from around the world."

What caught my eye on Joga was the fact that you can login to the site using your Google Acount although the site is clearly outside the Google network. It doesn't have a Google domain name and it doesn't share the Google look & feel (although the domain name is registered by Google). Does this project herald Google's aspirations to deploy a Single Sign On solution that will enable consumers to log on to internet websites with their Google Accounts?

Google has a history of releasing new features in a way that seems random and undeterministic. Those features tend to bubble up the product development pipeline if they receive a good user acceptance. For example Google Desktop Search started off as a small project by Steve Lawrence, a Google engineer who wanted to be able to easily search his Linux computer. A first beta version was released and now GDS is at its third iteration out of beta.

Don't think of it as a grand Google initiative to take over the web with its user names and passwords. It's more like a couple of soccer loving Googlers working with some sofware engineers at Nike to test a cool new way to mix social networking with Google Video and Google Accounts. This small initiative might evolve into a bigger project comparable to the Liberty Alliance or the Microsoft's .Net Passport - although it will probably come with a creative twist.