It appears that the gloves are off in the battle for online-payment supremacy, one which pits Google’s new payment feature Google Checkout against PayPal, owned by auction giant eBay. According to a report on Thursday, eBay has added its competitor’s service to the list of payment networks that eBay sellers are not supposed to use (a list that also includes AnyPay.com, FastCash.com and MoneyGram.com).
According to eBay’s “Accepted Payments Policy” the company “wants to ensure that the marketplace offers buyers an array of safe, appropriate and convenient payment choices for the marketplace. As described in our safe buying guide, eBay strongly encourages sellers to offer payments through PayPal â€“ PayPal is not only convenient to use, but it also offers buyers and sellers industry leading protection against fraud, chargebacks and theft of financial data.”
So is adding Google Checkout to the banned services list an anti-competitive act designed to favour its own in-house solution or is eBay just looking out for its sellers? The company says in its policy that “as new payment services arise, eBay will evaluate them to determine whether they are appropriate for the marketplace. Payment services that are not permitted on eBay may, in fact, be outstanding services for consumers in other contexts. eBayâ€™s evaluation relates only to whether a particular service is appropriate for the eBay marketplace.”
The company says that it considers a number of factors when it approves a payment scheme, including whether it offers privacy and anti-fraud systems, whether it has a track record of providing safe and reliable services, and the background of the payment service. For its part, Google said that it has “a long history in billing and payments for AdWords and for premium services, such as Google Video.” And what services does the auction giant approve of, other than PayPal? Well, there’s Bidpay, Certapay, Checkfree and, yes — Canadian Tire money, believe it or not.
After paying somewhere between $2.6-billion and a gazillion dollars (okay, $4.1-billion) for Skype about nine months ago, eBay finally seems to be getting around to doing some of the integration that everyone was talking about at the time. One of the most interesting possibilities is Skype-Paypal integration, as seen in a screenshot at Om’s blog — which in turn came from Random Good Stuff via a German blog.
Developers were apparently shown a right-click menu with the option to “send money (via PayPal) and “request money.” Random Good Stuff mentions the obvious possibility: Web-cam porn outfits asking you for money via Skype and PayPal. But at least eBay is starting to show us some synergies between it and Skype.
There’s another obvious one as well that is in the works: a SkypeMe button that sellers can attach to their profiles in eBay. But several major questions remain: Will enough sellers want that feature, or will it be an annoyance? And won’t it just encourage sellers to close transactions outside of eBay? And are these integrated features worth $4.1-billion?
Someone from 21talks.com points out in a comment that the PayPal functionality has already been announced, which was covered by their site and also by SkypeJournal. Thanks for that, Nuno. That makes eBay’s announcements yesterday somewhat less impressive.
Google’s move into online payment has been rumoured for some time now, at least since Google Base launched last fall. The thinking was that it made sense to attach a growing database of stuff to a payment system, which could theoretically compete with both Craigslist.org and eBay.com, not to mention Amazon. And it still makes sense – so much sense that it’s actually happening. Google says it has begun incorporating payments for Google Base items with your Google account, the same one you use for your Gmail and for creating those crappy web pages with Google Page Creator.
In fact, it’s been incorporated to the point where Greg Yardley has already bought something – a pink highlighter. Greg says the experience was preferable to that of buying through eBay-owned PayPal.com, which he said he despises. According to the comments on Greg’s blog, John K. of Got Ads has already bought a rock. Inside Ads has more info about Google Base if you’re interested.
On the official Google blog, they seem to be trying to downplay the whole “crush eBay, Craigslist-killer” kind of thing, although they do say that Google has “billed advertisers in 65 countries more than $11.2 billion in 48 currencies, and made payments to advertising partners of more than $3.9 billion.” Not exactly a little startup.
Bill Burnham notes that this is exactly how it is likely to roll out – gradually, but picking up speed. It means that Google has built a payment platform that is large enough and scalable enough that virtually anything is possible. Bill, who is a Very Smart Guy TM also points out that the “Buy It Now” feature that Google appears to have its sights on currently makes up about 40 per cent of eBay’s business. And in a related post, he discusses how the way Google has structured the service implies a greatly expanded role for it in the Google universe.
Even a few months later, the sheer size of the eBay-Skype deal still boggles the mind: $2.6-billion (U.S.) at a minimum, and as much as $4.1-billion if certain goals are met. All this for a company that hopes to have revenue of about $60-million this year, and (possibly) as much as $200-million next year.
Those two pillars supporting the deal are not carved in stone, however. The first — the power of the Skype brand — is a very fickle thing, since it rests on a service that is not only free but one that can be duplicated relatively easily. Obviously, free services in a highly competitive market can succeed (Google is an obvious example, although it has proprietary search algorithms) but the risks are high, particularly in the on-line world, where the consumer’s allegiance can shift almost overnight.
And what about the second pillar — the idea that Skype could be integrated with eBay’s auctions to allow a “click to call” feature that would connect buyer and seller? That is still a question mark, and one which recently grew larger, after the head of a leading eBay “power sellers” group said that he and his members didn’t see any benefit to using Skype. Combine that with speculation about how eBay is taking over the VOIP company’s management, and that $4.1-billion bet the auction company made looks even larger.
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Rob Hyndman uses Skype’s travails to make a great point about some of the risks of starting new ventures when technology is so cheap and users are so fickle: he calls it “the best of times and the worst of times.”
I don’t want to jump on the Skype-skepticism train that’s been going around, but Russell Shaw over at ZDNet — who writes a blog about VOIP — points to a story from TheStreet.com that suggests the eBay-Skype marriage could be less rosy than either company hoped it would be (or should be, for $4.1-billion). According to the story by Jonathan Berr, a group of eBay’s power sellers say they don’t have any real interest in using Skype to contact or be contacted by prospective buyers.
The group of about 900 sellers, who are members of the Professional eBay Sellers Alliance, don’t see the VOIP service as a compelling feature, according to the group’s executive director. “Skype doesn’t give me a capability that I already don’t have,” Jonathan Garriss told TheStreet. “It’s not something that is going to change the way that the eBay sellers in our group are going to run the business.” That might come as a bit of a shock to eBay CEO Meg Whitman, who has been selling the benefits of the merger of Internet telephony and eBay’s auction service. It might also come as a shock to some of those who have been defending the massive acquisition based on the idea that sellers will adopt Skype.
Russell points out that PESA isn’t just a group of malcontents, but one that “collectively accounts for a cumulative annual total of more than 70 million eBay transactions and $1 billion in transaction volume.”
Andy Abramson has some info about another Skype problem: the “Borg-like eBayization” of the company, which could be draining away some of the management style that accounted for the company’s early success. This is a phenomenon that my friend and fellow tech-blogger Mark Evans has also mentioned.