Correct me if I'm wrong,

but Google checkout and Paypal are commercial services?

Provided they are not colluding in a cartel then they are free to price the service as they like, and their customers are free to choose whether to use it or not.

If the new fee level generates excessive profits then a new entrant (or existing player) will undercut them. If instead this is a commercially realistic price then customers have to conduct a cost benefit analysis on whether it is worth using the service.

Until a new entrant (or existing player) determines how to offer the service at lower cost to themselves, so with the ability to offer sustainably lower prices, or decides to buy a book of business before ramping charges up to a commercially sustainable level (which is what it sounds like Google has done here).

Sure, a recession is underway, but even in a recession Google has no obligation, moral or legal, to offer services at below cost just to be 'nice'.

I am neither an adwords nor google check out user, so have no emotional attachment to these services.

Reminds me...

Has anyone noticed ebay fees are going up (again) this month- there's an announcement about cheaper fees, but delving into it turns up that it is cheaper listing fees for 99p start items only, while for almost every item the final value fee has been whacked up to 10%. Yes, 10%. Plus Paypal's fee, other listing fees etc etc etc, the total cost of selling must be approaching 20% of end price now. Would be interesting to compare this to other countries' rates to see if it's just Britain that's being ripped off.

Tim#3

Google checkout vs. PayPal

Even at similarly-priced service levels, Google checkout will ultimately win over PayPal for the simple reason that so many people do not trust PayPal. I have a GC and PP account myself, and virtually everyone prefers to use GC. I also run websites, one of which offers subscription that are paid for online, up until now via PayPal. The site owner has asked me to interface with another CC processing outfit because he has received numerous remarks about how people would love to sign up but do not want to have anything to do with PayPal.

While GC may be hiking their prices, they're still not as expensive as some. Also, there's no setup fee (usually around £200 for many places), no recurrent monthly fee and still reasonable rates.

Doing business on the 'Net has a price.

Saw it coming but still think they have made a strategic error.

In the short tern Google will see a virtual doubling of fee income. I have been using GC because it is almost pound for pound the same cost as the payment processor we use. Netsuite are about to launch GC integration for their customers, but I for one will not be implementing it on my Netsuite site. A consequence of the price hike, those of my sites on which I am using GC will switch over to payment processors only.

In the short term GC will double its revenue, but who would choose to use this service in the future where it is so uncompetitive? I would suggest it will be only very small sites that will retain this payment method, which is a shame as GC was a real alternative to a proper payment processor.

I never buy from any site that only accept PayPal, but I have been happy to spend money with Google Checkout, ho hum.

Its all about greed

Power corrupts, absolute power corrupts absolutely.

Welcome to the world of capitalism Mr Google. You have obviously grown up and sold your once childlike soul.

From now on you may be viewed differently. Ask Mr Gates. Not all rosy in the garden?

Foot, meet gun

Hiking price rates, I get - they were low before. Maybe the hike's too much (given the lower level of service compared to real payment processors), maybe not. What I do *not* get is cutting the AdWords link. On the one hand, yes, this was an effective cross-subsidy from Checkout to AdWords; but I have no doubt it did encourage use of the former and spending on the latter. If it now seems the cross-subsidy is too much, I would have thought it would make more sense to tweak or limit it than abolish it in one fell swoop - for publicity reasons if nothing else. Finally, why cut the link at the same time as the price hikes? This way they won't be able to distinguish the impact of the two moves. Google losing the money-making plot? I suppose probably not.... they probably know what they're doing...

Re: Get a merchant account

The page at that link clearly states that it applies only for those who expect more than 1000 transactions per quarter. That's basically 10 a day. Those of us with that kind of volume have already dropped outfits like Google or PayPal.

Credit Cards?

Lots of traders moved to Paypal from credit card payments because Paypal was cheaper. Then Paypal put their prices up to something more inline with credit card transactions. So the traders moved to Google Checkout because they were cheaper. Then Google put their prices up to something broadly in line with Paypal.

It's standard business practice to introduce a new service at a bargain price and then put your prices up to what the market will stand. I'm not quite sure why people expect online businesses to behave differenly from other businesses, but that's exactly what seems to happen.

@AC It's all about greed

"Welcome to the world of capitalism Mr Google. You have obviously grown up and sold your once childlike soul."

WHAT?! Speaking of childlike, you sir/madam are about as naieve as it's possible to get. Google has always been about making as much money as possible and trampling on the little guy if necessary. I didn't think anybody fell for their "we're just a bunch of lovely hippies" spin, but you obviously did.

There's always one.

Great opportunity for ... Microsoft?

Yes, I know there are a lot of MS haters here, but it would seem that this could be the most incredible opportunity for them to come up with a payment processor and win over the 'not evil' Google's clients. If Google Checkout = PayPal = Evil, then there's a moral high ground for the small guy here.

ProTX cheaper? I think not!

"How does 10 pence per transaction, no percentage cut, no set up fee, no annual fee sound?"

Wrong, wrong, wrong. I hear this all the time, but on another ProTX page:

"You will need to pay fees to both your merchant bank for the costs associated with your merchant account and to Protx for processing the payments."?

So you need a merchant account which will charge the percentage cut.