May 15, 2007 | Tuesday

The Google/eBay face-off

By Jackie Danicki - Blogger in News |Online Sales |Search Engines |Google

NMA reports on the latest move in the battle between Google and eBay (which owns PayPal):

PayPal is becoming a bank in its latest effort to fight off rival online payment system Google Checkout.

The payment service has been granted a banking licence in Luxembourg and it’s moving its headquarters to the country in a shift that will mean it will no longer be authorised by the Financial Services Authority.

With over 130m users worldwide PayPal is the largest online payment system in the world, but Google launched its Checkout service in the US last year and is widely expected to move further into the online payments field. PayPal has 35m customers in Europe, including 15m in the UK and more than half of British internet users have a PayPal account.

Chris Dawson speculates on what this may mean for PayPal account holders:

The irony is in the near future it could be possible to click through Google Checkout with your PayPal bank card - it’s already possible to use Google Checkout with your PayPal credit card (although it’s an affiliate card though GE Capital Bank Limited). Many larger retailers don’t accept PayPal services but the change from an electronic money issuer to a banking institution could make them a more attractive proposition.

...It remains to be seen which services will be affected by the changes. The despised ten day clearing time for eCheques should clear more promptly. PayPal Website Payments Pro (very similar to a full merchant account) may become more attractive to large retailers. PayPal will also have more flexibility to introduce new features such as debit cards allowing you to spend funds held in your PayPal account.

There has never been any love lost between Google and eBay, and this is certain to kick things up a notch in their battle for supremacy. The only clear winners are we customers, who thanks to this intense competition will now have a greater choice of more rich features and services.