Google Checkout buys Paypal's traffic

"It turns out [the company] does not have anyone you can talk to in real life -- only via e-mail," complained an unhappy customer.

Hands up if you can name the company. eBay? Wrong. Paypal? Wrong again. It's Google.

Google Checkout was supposed to be the "Paypal killer" - so much so that eBay changed their own payments policy to forbid its use on the site. But far from being the answer to the prayers of those hoping to break the eBay monopoly, the service has been beset by problems, with customers being charged multiple times, and merchants not being paid at all.

But Google's attempt to buy traffic by offering US$10 off a $30 purchase, or $20 off a $50 purchase seems to be paying off, with increases in traffic from merchants to Checkout which seem to be directly related to the merchants' promotion of Google's $10 offer.

Of course, Paypal too ran a "$5 new account bonus" promotion when they were just a start-up. Would they have ever achieved such popularity without eBay merchants and their customers? It seems unlikely that a few dollars will buy much long-term loyalty; convenience and reliability are much more likely to bring the customers back, and keep them hooked. The acid test for Checkout will come when the promotion period and the shopping season are ended. November and December can be expected to show all sorts of crazy highs for anything associated with retail: the real proof will come in February.