Google to Roll-out PayPal Competitor

Friday, The Wall Street Journal reported that Google is making preparations towards releasing a new electronic payment system which will a direct competitor to eBay's PayPal.

PayPal is an account-based system that lets anyone with an email address securely send and receive online payments using their credit card or bank account. It is the most popular way to electronically pay for eBay auctions and it is becoming a cheap way for merchants to accept credit cards on their on-line storefronts instead of using a traditional payment gateway.

But there are a lot of problems related to eBay's PayPal, many users complaining about the service's security and the dictatorial policies enforced by it. There has to be some truth in all this, otherwise there wouldn't be a site whose sole purpose is to discredit it.

Hence, if Google rolls-out a service that will outperform PayPal, eBay's revenue obtained from this service will be seriously threatened. And eBay cannot disregard this, considering that in the first quarter of this year, PayPal brought the auction site $233.1 million.

With this move, Google will also become less dependent on advertising which accounted for nearly all of its first-quarter revenue of $1.26 billion.

"It could be a pretty big negative for eBay if it happens," said Safa Rashtchy, an analyst for Piper Jaffray.