Observers Split over How Much Google Will Compete with PayPal

With online search giant Google Inc. reportedly a week away from launching its long-expected payment service, observers differ on the question of whether the service will allow merchants to accept electronic payments on their own sites or be limited to Google’s own platforms, especially the rapidly growing Google Base online bazaar. The former approach would make the service a generally accepted payment mark and would thrust Google directly into competition not only with established marks like Visa and MasterCard but PayPal Inc., as well. PayPal is a unit of Internet auctioneer eBay Inc., a marketplace with which Google is increasingly competing for online sales.

Google, which has long denied it is seeking to compete with existing online payment networks like PayPal, has been mum on details of its new service, rumors of which first surfaced a year ago. Speculation about Google’s payment service was triggered anew recently when RBC Capital Markets, an investment-banking unit of Royal Bank of Canada, released an analyst report predicting the service, which it called GBuy, would launch June 28 with “a surprising number of merchants.” The report, which estimated GBuy would charge merchant fees between 1.5% and 2%, said the service would allow Google to collect transaction data about products sold through its clients’ search results, information that could influence the rates Google charges for its bread-and-butter paid-search business....for more of the story from Digital Transactions