Google Checkout Adjusts Pricing Upward – Matching PayPal

by Scott Loftesness on March 12, 2009

in Amazon Payments, Ecommerce Payments, Google Checkout, PayPal, Scott Loftesness

Scott Loftesness

Yesterday, Google Checkout announced that it was changing its fee structure beginning May 5 – eliminating the previous credit that Google AdWords customers got that reduced their Google Checkout fees.

Instead, the new Google Checkout fee structure essentially parallels that of PayPal’s – a long-standing fee structure that the online payments leader has had in place for many years.

Below are the two fee tables:

Monthly Sales Google Checkout
fee per transaction
Less than $3,000 2.9% + $0.30
$3,000 – $9,999.99 2.5% + $0.30
$10,000 – $99,999.99 2.2% + $0.30
$100,000 or more 1.9% + $0.30
Monthly Sales PayPal fee
per transaction
$0.00 – $3,000 2.9% + $0.30
$3,000.01 – $10,000 2.5% + $0.30
$10,000.01 – $100,000 2.2% + $0.30
> $100,000 1.9% + $0.30

Google Checkout continues to only support funding via the four major payment card brands for US sellers: Visa, MasterCard, American Express and Discover. Unlike PayPal, Google Checkout continues not supporting funding directly (via ACH) from checking accounts.

Both Google Checkout and PayPal have a 1% surcharge to US sellers on all cross-border transactions.

What about Amazon Checkout (or Amazon SimplePay)? You guessed it – the fee structure is essentially the same – starting at 2.9% + $0.30 per transaction in the lowest tier and going down to 1.9% + $0.30 per transaction for monthly sales over $100,000. Sound familiar? Amazon allows buyers to pay using Visa, MasterCard, Discover, American Express, JCB, or Diner’s Club credit cards.

Amazon does have a subtle difference – those fees apply to transactions of $10.00 or more. For transactions of less than $10.00, Amazon’s fees are 5.0% + $0.05 for all transactions – with no tiering based on monthly sales.

So, that’s where things stand today. With Google’s just announced changes, all of the three major online payment players have priced their services essentially the same – for US sellers. However, there are more differences “under the covers” between these services than just the pricing would seem to indicate.

What are your thoughts? Share them in the comments below!

11 Responses to “Google Checkout Adjusts Pricing Upward – Matching PayPal”

  1. Jack says:

    Why don’t Google and Amazon perform ACH transactions? Is it because they would get sued by LML Payment Systems for patent infringement as did PayPal and 18 others?
    Wake up out there!

  2. I believe that all the credit card based systems have now to cover more risks and operational costs than before, this may reflect part of it. It would be interesting to see if fraud statistics are changing in the last months or remain at the same growth pace as in 2008, although with part of these systems the real numbers are impossible to know because repudiation is an internally closed process that is not always reported to the external world….

  3. Russ Jones says:

    I think the story here is the elimination of the financial incentive for merchants to use both Google AdWords and Google Checkout. This is startling to some because Google has long positioned Checkout as an advertising innovation. I think it still is, and here’s why.

    For the last three years, Google had structured their pricing so that merchants received $10.00 in free Google Checkout transaction processing for every $1.00 they spent on AdWords. This was an important incentive when Google Checkout was new and had no track record. But today, merchants that use Google Checkout have lots of good things to say about higher click thru rates, better conversion rates, etc.

    Checkout and AdWords are still closely linked. Nothing has changed in that regard. I think Google just woke up and realized that their key value to merchants is increased sales, not lower transaction cost. In effect, the company was leaving money on the table with their incentive program. I don’t anticipate Google losing one single merchant as a result of this pricing change.

  4. Rich Brennan says:

    I agree with Russ. This new pricing structure is a realization that Google no longer needs to ‘subsidize’ the use of Checkout and is now able to demonstrate the value of higher click-thru rates and sales conversions. Now that the pricing field is level it will be interesting to watch how the three leaders innovate on the features and functions.

  5. Steve Klebe says:

    I agree that the subsidies had run their course, but I believe that without them, Google Check-out will begin a steady decline unless they re-invigorate it with other innovations. A simple e-wallet for credit cards just does not cut it. The value proposition for the consumer is very thin, mostly based on fear and ignorance, rather than real value. Adding another layer in front of what already is a 4 party system just does not make sense.

  6. Scott Waldrum says:

    Good summary Scott, thanks. This change makes sense but google has a ways to go yet before they are competitive with the other offerings out there. One of the fastest areas of growth is the recurring payments sector as online subscription services grow. Google has no offering here, paypal and amazon have a static recurring payment solution that works for simple services. I think we’ll continue to see these players move up the food chain into the realm of subscription payment solutions like IPApplications variable recurring payments solution and similar offerings from Zuora and Vindicia.

  7. Scott – a quick add to the article – You probably didn’t know that PayPal has offered micropayments pricing to merchants for a number of years, well before Amazon and guess what it is – 5% + $0.05! Here is the link with more details –

  8. Rahul – thanks for pointing that out. I remember when the micropayments pricing was in beta – and then graduated to full status – but forgot to mention it in the article. Thanks for adding it.

  9. Sam Mort says:

    Does Amazon Payments also charge additional 1% to US sellers on all cross-border transactions like Google Checkout and PayPal?

  10. Linda says:

    After many many problems with paypal I would love to see a matching alternative, even if the rates were higher it would be worth pushing paypal into the deep sea. Google made a big mistake hiking rates, their offerings and options are much less than Paypal, and if you are enamored by PP, then why use checkout

  11. Brian says:

    Are there any extra cross-border charges on Amazon checkout. Google checkout and Paypal charge 1% for cross-border transaction.

    Cross-border transaction means when buyer and seller belong to different countries.

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