David Fiske Affiliate Marketing & Web Development

When Google Checkout launched many moons ago, it sent curious shock waves around the merchant side of the web. Would it kill PayPal? Would loyal PayPal users make a switch?

The novelty with Google Checkout was the tiny percentage it charged to merchants for each credit card transaction. Sales up to 10 times the percentage of any AdWords spend was free and thereafter each transaction was charged at 1.5% + £0.15 per transaction. Compare this to PayPal's standard of 3.4% + £0.20 per transaction and you'll see why there was so much interest.

But alas, an innocent looking email now blows all that out of the water.
 
Be it the credit crunch or basic economics, Google have now had to impose some changes which will apply as of the 5th May 2009.

They are now to use the PayPal business model exactly:



The chargeback fee will be £7, the same as PayPal too.

The only real difference is that Google state:

An additional 1% fee will be assessed on transactions where the merchant's country is different from the buyer's billing country. With 10 days notice, we may also charge higher transaction processing fees to merchants that incur excessive chargebacks or otherwise pose financial risk to Checkout.

It's this 1% on top of the new fees that will lose Google some custom.

I for one will switch back to PayPal-only transactions for sites like Price Tapestry Templates which attract international transactions.

This move by Google was probably always inevitable but by hiking up the fees so much and pricing themselves above the competition (international transactions) in this kind of industry will not be liked by many.