Google Ups Checkout Fees

Effective May 5, Google Checkout is moving to a tiered fee structure and is eliminating its AdWords discounts for sellers who use the search giant’s online payment processing system.

The new pricing effectively raises rates for most online merchants, and puts the online payment system more in line with PayPal’s rates.

The new rates will range from 1.9 percent plus 30 cents per transaction for monthly sales of $100,000 or more, to 2.9 percent plus 30 cents per transaction for monthly sales of less than $3,000. And, any transactions with buyers outside your home country will incur an additional 1 percent fee.

Currently, e-commerce site owners pay 2 percent plus 20 cents per transaction, with no monthly, setup, or payment gateway service fees.

Google also said it would discontinue the AdWords credit promotion that’s tied to Checkout. The way it works now, merchants who advertise with Google AdWords are eligible for free transaction processing for some or all of their Google Checkout sales each month. For every $1 spent on AdWords each month, merchants were allowed to process $10 in sales the following month for free through Google Checkout.

Google did say any AdWords transaction processing credits accrued during April 2009 will be applied towards transactions that occur on May 1 to 4, 2009, and Google Grants recipients will still be eligible for free donation processing until 2010.

When Google released Checkout in June 2006, there was speculation that it might overtake PayPal as the primary online payment processor, even though the two differ. Checkout provides another gateway for Google users to make credit card purchases online, while PayPal primarily acts as a replacement to using a credit card to complete an online transaction.

But Checkout never really became widely adopted in the marketplace, though some studies have shown it to be popular with males ages 18 to 34, and recently it’s being promoted for the mobile Android platform. Because Google never reveals the number of users who use Checkout, it’s hard to discern what impact the new pricing will have, and whether the change is due to its failure or success.

Regardless of numbers, it’s bound to be good news for PayPal, which now offers more merchant services for about the same cost, and just mapped out an agenda to double its revenue by 2011.

Google did not respond to a request for comment by press time.

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