Report: Google To Launch PayPal Competitor
Reports of Google's plans for a payment feature surfaced Thursday at Piper Jaffray's Global Internet Summit in Laguna Beach, where an executive of an e-commerce company told attendees that Google approached him about the service. On Monday, Piper Jaffray analysts Safa Rashtchy and Aaron Kessler issued a research note stating that they had independently corrobated the executive's report. The note further speculated that Google is possibly aiming to release its service before the holiday season, and that the search giant likely is already testing the product with a group of e-commerce sites.
A Google spokesman declined to comment.
The move, the analysts predicted, could hurt eBay's PayPal--currently the leading electronic payment service on the Web. "Regardless of the initial success of the product, we believe that such a launch would likely negatively impact eBay shares and could be a positive catalyst for Google," the research notes stated. "A Google payment system may not compete directly with PayPal, but it could limit PayPal's expansion beyond eBay."
While PayPal has a signifciant lead in the electronics space, Google has overrun entrenched competitors--notably Yahoo!'s Overture--before, noted Rashtchy and Kessler. "Google will of course be facing significant hurdles to compete with the well-established PayPal, which has more than 72 [million] users," they stated. "However, we note that when Google entered the paid listings business, it also had to catch up with a much more established Overture, which it eventually replaced as the number one provider of paid search listings."