eBay Blocks Google Checkout as Payment Option

Checkout, which launched amid swirling questions about how a Google payment system would impact eBay's own PayPal, does not appear on a list of acceptable payment methods that eBay updated this week based on a global payments policy developed last year.

"We've updated the policy to identify those payment methods that we've determined are not appropriate for the eBay marketplace," Rob Chesnut, senior vice president for trust and safety at eBay wrote in a posting announcing the changes. "Please note that eBay's evaluation relates only to whether a particular service is appropriate for the eBay marketplace. These payment methods may, in fact, be useful services for consumers in other contexts."

Google did not respond to a request for comment on eBay's move. Checkout launched last week with some analysts saying it represented more of a threat to merchants such as Amazon.com (Nasdaq: AMZN) than to eBay, since it is not designed to handle peer-to-peer transactions -- at least, not yet -- that don't require a credit card to back them.

Plenty of Company

While eBay heavily promotes PayPal as the preferred payment option on its platform, it gives sellers some other options, including Allpay.net, Bidpay, Canadian Tire Money, Checkfree.com, hyperwallet,com, Moneybookers.com, Ozpay.biz and XOOM.

The list of payment options not allowed is far longer and also includes AlertPay.com, anypay.com, FastCash.com, gcash, Moneygram.com, Netpay.com, Qchex.com and xcoin.com.

"While many of the payment methods offered by eBay sellers offer a high degree of safety and convenience, a few simply are not appropriate for the eBay marketplace," Chesnut said.

The move to halt Checkout comes against a backdrop of significant change both within eBay's marketplace and within eBay itself. On Thursday, the company announced a major restructuring and reshuffling of upper management, possibly a response to the Google threat.

eBay said the executive now running PayPal will leave later this year and will be replaced by the executive overseeing another of the company's major acquisitions, Skype .

Game On

While Google may have some legal avenues to pursue if it feels eBay is unfairly locking it out, it may be content to wait for its payment solution to get traction. Then, eBay users may be the ones to push for a policy change.

For now, though, eBay may be landing the first body shot by using the notion of "trust" to reject Checkout and other payment options. Google is counting on consumers to trust it with their financial information -- otherwise, Checkout will not succeed, noted Forrester analyst Charlene Li.

"I think people will be comfortable with Google as the intermediary in some sales and with it keeping their transaction histories as well," she said. "The risk is that at some point, people start to worry that Google has too much insight into their behaviors, but that's more of a long-term risk."

The long-term risk for eBay and PayPal will be if Checkout adds payment options that don't rely on credit cards, enabling peer-to-peer payments backed by checking accounts or other forms of stored money, Li added.

The conflict may help raise awareness of the growing number of payment alternatives now available to compete with PayPal and direct credit-card payment. For instance, MODA Solutions, which uses e-mail and online banking billpay to enable payment, is gaining traction, said MODA CEO Marwan Forzley, but the firm doesn't have the marketing budget to match eBay or Google.

"Right now, word of mouth and merchant adoption is what's driving our growth," Forzley told the E-Commerce Times. "If you can provide a safer alternative that reduces the risks of buying online, people should be able to find you."

Search Engine Journal Editor Loren Baker said eBay's move is likely just the beginning of additional jockeying for position, with eBay's recently announced partnership with Yahoo (Nasdaq: YHOO) adding to the intrigue.

"You can chalk this up as one of the first striking blows in the Google vs. Yahoo-eBay payment war," he said.