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Google Mum on Online Payments Service

Google isn't talking about reports the company is testing an online payment service that could compete with eBay's PayPal. The system reportedly is dubbed "Gbuy" and set for beta release later this month.

In a carefully worded statement, a company spokesperson said billing and payments have "historically been a part of Google's advertising program and online services."

Beyond that, Google said in a statement it had "nothing specific to announce at this time."

According to Reuters, Google CEO Eric Schmidt confirmed the search giant was testing a payment service, but denied it would compete with PayPal.

The denials could be viewed as the other shoe hitting the ground following Google rival Yahoo's recent deal to use PayPal for user transactions.

As part of the agreement, Yahoo will use Paypal for user transactions. At the time, both eBay and Google said they would continue to work together closely.

Last week in a research note, RBC Capital Markets analyst Jordan Rohan wrote that GBuy would launch June 28 as a free beta preview. Rohan said Google will eventually charge merchants between 1.5 percent and 2 percent, similar to PayPal.

As part of the service, merchants using GBuy will be shown as a "trusted GBuy merchant," which could increase consumer acceptance.

Rohan said the Google service would directly compete with PayPal. While initially the service is consumer-to-merchant, nothing prevents the system from expanding into consumer-to-consumer transactions.

EBay did not respond to requests for comment.

Google already has an online payment system for its Google Base classified advertising service. At the time, one analyst saw competing with PayPal a natural next step for Google.

"It's clear when you look at it who the competition is, clearly Google is going after eBay and PayPal," said Andy Beal, CEO of Fortune Interactive, a search marketing consulting firm based in Raleigh, N.C.

But Google, in its statements, has walked a fine line, pointing out that its service targets advertisers, not consumers. But this isn't the first time Google has had to deny it has PayPal in its sights.

Before Google Base was announced, Schmidt responding to rumors of a payment system, said last year the company wasn't targeting eBay's payment service.