Google Checkout: Same fees as Paypal, what advantages?

March 11th, 2009 by Richard Bairwell Leave a reply »

Well, within a few weeks I was going to update a new e-commerce site hoping to utilise Google Checkout and the benefits it offered (the previously discussed lower fees than Paypal and those fees could be reduced to zero by advertising on Google). But no more!

Like many others, I’ve just received the email (below) from Google (yes, I’ve authenticated it: it came to a specific Google Checkout email address I’ve got setup, through Google’s servers and checked with SPF: it’s even on the Google Checkout blog) which basically state “We’re hiking up fees and cancelling the advertising discount”. What rate are they hiking up to? Well, their website shows the following fees and I’ve included Paypal’s Fees for comparison:

Sales volume per month Google Checkout Paypal
Less than £1,500 3.4% and 20p 3.4% and 20p
Between £1,500 and £5,999.99 2.9% and 20p 2.9% and 20p
Between £6,000 and £14,999.99 2.4% and 20p 2.4% and 20p
Between £15,000 and £54,999.99 1.9% and 20p 1.9% and 20p
Over £55,000 1.4% and 20p 1.4% and 20p

<sarcasm> Wow – so much difference. </sarcasm>

Yes, they are identically (ok, Paypal’s limits are “between £1,500.01 and £6,000″/”between £6,000.01 and £15,000″/”between £15,000.01 and £55,000″ so there is a penny difference in 5 exact cases!). (cough)Price fixing?(/cough)

But surely Google Checkout will be cheaper than Paypal for “cross-border” transactions (i.e. where the buyer and seller are in different countries):

Sales volume per month Google Checkout Paypal
Less than £1,500 4.4% and 20p 3.9% and 20p
Between £1,500 and £5,999.99 3.9% and 20p 2.4% and 20p
Between £6,000 and £14,999.99 3.4% and 20p 2.9% and 20p
Between £15,000 and £54,999.99 2.9% and 20p 2.4% and 20p
Over £55,000 1.4% and 20p 1.9% and 20p

So Google Checkout is actually more expensive then Paypal: and Google Checkout hasn’t got the market penetration than Paypal, hasn’t got the ease of integration of Paypal, hasn’t got the wide range of integration options than Paypal, hasn’t got the facilities of Paypal…

I’d just like to know why I should bother with Google Checkout instead of Paypal (baring in mind, the more payment methods offered the lower the theshold for discounts I’ll reach on any one of them and the more transaction fees I’ll pay). To me, it looks like Google Checkout is checking out and won’t be here this time next year…

Update:
11/Mar/09 21:46 GMT: Marketing Pilgrim isn’t sure if this is a sign of Google Checkout’s Success or Struggle (one of the commenters, James Wilton, there actually said what I first thought: “Perhaps Google is trying to kill Checkout by attrition? They certainly haven’t been investing resources into it.”
11/Mar/09 22:11 GMT: Just to confirm, it isn’t just the United Kingdom prices going up – it looks like a world-wide increase!
11/Mar/09 22:13 GMT: Explode On Twitter has already dropped Google Checkout for Paypal (as Paypal is simpler for all concerned). Has Google really sounded the death bell for Checkout?
11/Mar/09 22:22 GMT: There is a Google Support Forum Thread about this and it appears from a quick scan people are going to be dropping Checkout for Paypal after this fee increase (some are even talking about ditching Adwords!).
11/Mar/09 22:28 GMT: @jessicamerritt says she’s going to stick with Checkout because of their chargeback policy (in particular the fair treatment section on their fraud/chargeback page). I’ve not handled a chargeback through Checkout so I don’t know how good it is, but I’ve found Paypal a lot more “friendly” and accommodating than dealing with Lloyds TSB Cardnet chargebacks. Yes, Paypal (and others) do “freeze the funds”, but you do get the money back after the dispute (and from their point of view, it stops bad merchants “doing a runner” with the funds).
11/Mar/09 22:43 GMT: For comparison, here is the Paypal UK Discount Fee structure and the US one is here.
11/Mar/09 22:59 GMT: KingJ is no longer recommending Google Checkout as he(?) handles a large number of cross-border transactions and hence the transaction fee increase will cost him more than Paypal. Stanstech is also saying Goodbye to Google Checkout. I’ve also just checked and Paypal’s Chargeback fee of £7 is identical to Google’s new fee for chargebacks.. Hmm…
12/Mar/09 00:20 GMT: There is now also (as there always is) a Facebook group against the price rises. I’m personally not against the price rises on their own, I’m just against them it takes away the only benefits of using Google Checkout there was and the fact the prices match Paypal’s point for point: do they really both have identical operating costs?
12/Mar/09 11:59 GMT: ValleyWag chimes in asking whether this is the start of Google introducing higher fees for all their services.
12/Mar/09 12:01 GMT: EdSF nicely sums up the advantages Paypal has and the poor customer service he’s had from Google.
12/Mar/09 15:56 GMT:The Register now has an article of the Google Checkout fee increases. It’s getting wide publicity, but will Google realise how much they’ve annoyed merchants and that there are now no advantages to accepting Checkout?


Digg!


Here’s the email in full:

Hello,

We’re writing to let you know that on 5 May 2009, Google
Checkout’s transaction processing fees will be changing. We will
be transitioning from our 1.5% plus £0.15 per transaction rate to
a new tiered fee structure, where the rates will vary depending on
the amount of your monthly sales processed through Checkout. The
rate you will be charged beginning on 5 May 2009 will be based
on your sales processed through Checkout during the month of April
2009. Each month thereafter, we’ll continue to use the prior
month’s sales volume to determine your transaction processing
rate. For more details about the new rates, please visit
https://checkout.google.com/seller/fees.html?hl=en&gl=GB

We will also be discontinuing the AdWords free transaction
processing promotion on 5 May 2009. Any AdWords transaction
processing credits accrued during April 2009 will be applied
towards transactions that occur on 1-4 May 2009.

Fees are the same for all payment types (Visa, MasterCard, UK Visa
Electron, UK Maestro, Solo) and there are still no monthly, setup,
or gateway fees. For cross-border transactions, there will be an
additional 1% fee assessed per transaction. To learn more about
Google Checkout fees, please visit
https://checkout.google.com/seller/fees.html?hl=en&gl=GB

Discontinuing the AdWords free processing promotion involves a
change to our Terms of Service:
https://checkout.google.com/termsOfService?type=Seller#GB. In
order to continue to use Checkout from 5 May 2009 onwards, you
must login to your account and accept the new Terms of Service
between 18 March and 4 May. You may login to your account here:
https://checkout.google.com/?gl=GB&hl=en

Google is committed to the continued growth and development of
Checkout and to helping merchants increase sales by driving more
leads and higher conversions. Advertisers who use Checkout have
the opportunity to display the Checkout badge on their ads, which
has proven to be an effective way to differentiate ads and attract
user interest. Checkout users click on ads 10% more when the ad
displays the Checkout badge and convert 40% more than shoppers who
have not used Checkout in the past.

For more information about this change and how it affects the
product, please read our post on The Official Google Checkout
Blog: http://googlecheckout.blogspot.com/2009/03/google-checkout-fees-in-2009.html

If you have any questions, please visit our Help Centre at
http://checkout.google.com/support/sell/bin/answer.py?hl=en-uk&answer=134473
Thank you for using Google Checkout.

Kind regards,
The Google Checkout Team

Google Payment Ltd is authorised and regulated by the Financial
Services Authority.

Google Payment Ltd is a company registered in England and Wales
with company number 5903713. Its registered address is Belgrave
House, 76 Buckingham Palace Road, London SW1W 9TQ.

Email preferences: You have received this mandatory email service
announcement to update you about important changes to your Google Checkout account.

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3 comments

  1. Mike Wilson says:

    Hi,

    It’s definitely an issue for me too. I foresee an uptake in PayPal payments. I’m already adding PayPal as an alternative option to my shopping carts.

  2. Matt says:

    Good info – thanks. We were pondering integrating either PayPal or Checkout in the future, so this just adds a bit more ammunition to the ‘well, actually, I feel PayPal would be best because it is more established..’ argument..!

  3. It’s an issue for me too… I mainly use Google Checkout and also have Adwords and paid very little… now it’s not worth it to me anymore. I’ll probably be switching to ACH processing and require it of my clients for larger payments.

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