Google Checkout

There is a lot of chatter and excitement about Google Checkout, a new rival to Paypal. Part of the discussion is based on the hope that this will put some pressure on PayPal and eBay on fees and service, as commented on Digg.

Another aspect I find very interesting is the creation of a CPA advertising model, Cost Per Action, instead of the usual CPC, Cost Per Click, or the older CPM, Cost Per 1,000 impressions. Om has a great post on Why Google Is Doing Checkouts.

Lets compare the two – CPC and CPA based ads. In case of CPA, there are no wasted dollars, no click fraud, and all the revenues are coming from sales. As an advertiser, you have no risk. You sell, you make money, Google gets a piece of the action. Why would you bother with other options?

Om also links to a NYT article on how Google Aims to Speed the Online Checkout Line.

Google is charging merchants 20 cents plus 2 percent of the purchase price to process card transactions, less than most businesses pay for credit card processing. Banking industry executives say that credit card processors typically pay MasterCard and Visa a fee of 30 cents and 1.95 percent for every purchase, so Google will be subsidizing many transactions.

What is more, for every $1 a company spends on search advertising, Google will waive the fees on $10 worth of purchases. Factoring in the 2 percent fee, that represents a rebate of at least 20 percent of advertising spending.

Overall a great explanation as to why Google is moving in this direction and where it is trying to get to. And Google proves again it can shake the industry and do very innovative things. Om also linked to Sramana Mitra’s YahooBAY as a possible response to Google.

Hoboken Looking to Run St Mary’s Hospital »« Hoboken Parking Permits