Today Google launched their Google Checkout service. With it, buyers can authorize purchases simply by entering a single email and password (after registering their credit card information) at stores that are supporting the new payment system. The expectation is that this approach will help to speed online purchases. On the seller side, companies can sign up to accept credit card payments through the
I walked through the Checkout seller information this morning and it appears that Google has a pretty good package if you’re an online merchant that needs an economical way to process credit cards.
There is some high-level information about fees (2% plus .20 per transaction), which obviously applies on the purchase side, however I’m guessing that this applies to refunds and chargebacks too? I’m not sure. I haven’t found on the Checkout site where it lists these fees, if any. In fact, if Google won’t be charging refund or chargeback fees, this would set them apart from many online services. I imagine this information will become more clear as Google gains more experience with Checkout.
There are a couple other signs that Google Checkout is in its infancy. Checkout currently only supports businesses in the United States, it’s unclear to me if buyers can be located outside the US, partial refunds aren’t supported, is there a limit to what a buyer can spend over let’s say a year (this can be a real big pain if you sell expensive items or products to large companies), reserve amounts are said to be “rare” but what does that mean, and initial monthly payouts are limited to $500/month and then beyond this money is paid out slower. For many small businesses cash flow management is critical and these hazy descriptions make me want to ask a few more questions. How fast is the “slower” payout if your transactions exceed $500? What is the reserve based on? Chargebacks? Can you get kicked out of Google Checkout for too many chargebacks? (Some services have rules such as this, for instance.) In fact, if you do get bumped from Google Checkout how fast would you get paid out? I’ve heard of some services wanting to hold a reserve for six months after the merchant status was suspended. Again, in a small business these are big issues. And here’s one more question: since the merchant is having the money posted directly to a bank account are fees pulled from the same account or does Google extract fees first? There’s a big difference between the two. For instance, are chargebacks pulled from the bank account or your next sales?
I didn’t go through the process of signing up for Google Checkout, but it’s good to see that Google Checkout will be “initiating” pay out directly to your bank account within two days. Of course, your bank might sit on the money for a few days too. The lag time might hurt a few businesses where cash flow is critical and there is wild variance in what is sold, however, this timeline isn’t that far off from what most merchant accounts experience.
I do think Google Checkout is missing an opportunity here to provide an even better service that handles sales taxes. This is a complete pain for small businesses and with the power of automation at their fingertips, I don’t understand why there isn’t an option for this to be handled transparently for the merchants.
Overly, Google Checkout looks to be a good start for small, online merchants. If you’re an “occasional” merchant, however, PayPal is probably better. And if you’re a merchant that doesn’t want to handle all the intricacies of sales taxes and the link, there are probably other, better choices. I’m guessing that Google will figure out how to spread out into each of these two markets.