It was always on the cards that Google was going to raise the prices of their payment processing service, GoogleCheckout. Up till now I had effectively used GoogleCheckout for free, as they offset their 1.5% + £0.15 processing fee against my Adwords spending. But they are dropping the Adwords offsetting and introducing a new tiered pricing structure.
As I put most of my payments through PayPal I will probably be on the highest price tier of 3.4% + £0.20 per transaction. This means that a £19.95 sale will cost me £0.88 (4.4%) through GoogleCheckout as opposed to the £0.68 (3.4%) I pay through PayPal. I wouldn’t mind the higher fees if I got a better service than PayPal. Unfortunately GoogleCheckout still has all the flaws I commented on back in April 2007, namely:
- Google still don’t accept payments in more than one currency (e.g. as a UK resident I can only accept payments in £). Expecting anyone outside the UK to pay in £ is a very bad idea.
- Delays between customer purchase and payment clearance result in angry and/or confused emails from customers wondering why their licence key hasn’t arrived. This has improved since the early days of GoogleCheckout, but it is still an issue.
- Google’s option to anonymise the customer email address is a royal pain in the backside for the vendor. It causes me of lots of wasted time and unecessary emails.
- The customer *has* to sign up for a GoogleCheckout account (unlike PayPal).
- There is a £7 chargeback fee (PayPal don’t charge a chargeback fee).
- Customers prefer PayPal.
About the only advantage of GoogleCheckout is the GoogleCheckout badge that appears alongside your Google Adwords ad. In their email to me explaining the price rise Google claim:
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.
My own measurements showed a worthwhile effect from the GoogleCheckout badge, but I am not convinced it is worth the additional problems and expense of GoogleCheckout just to get the badge.
I already push PayPal more than GoogleCheckout (e.g. you have to click a link from my US dollar payment page to see a GoogleCheckout button). The price increases will probably result in GoogleCheckout being pushed further into the background for use just as an alternative for those that don’t like PayPal. I don’t know if Google will punish me by removing my Adwords badge.
Note, in order to continue to use GoogleCheckout from 5 May 2009 onwards, you must login to your account and accept the new Terms of Service between 18 March and 4 May.
Thanks for the tip on the customer email address mangling. We were toying with adding GoogleCheckout, but not having a clear customer contact method is a killer. We’ll stay with PayPal.
I wonder why Google is ditching the adwords deal–I figure this would be more an incentive for users to choose an entire Google solution for their business–well worth it from Google’s perspective considering most of their revenue is from adwords and not payment processing. They should just view the payment processing as a way to get more merchants into using adwords and also to get more Google accounts. The payment processing fees should be viewed as pocket change.
My bet-they will revert to the having the adwords deal once they realize that vendors are going back to advocating the use of Paypal, and what the loss of this deal does to their reputation with their current adwords customers.
After reading the above post, I dont think I will be using Google checkout in my upcoming produc releases. Its a shame..it worked so well when I was actively selling a year ago.
We accept paypal, google checkout and credit cards directly. Having all three payment methods has increased our sales. I appreciate Google Checkout’s automatic deposits & so far it seems like our rate with Google Checkout averages less than Paypal – I suppose that’s due to interchange fees.
We have been using Wells Fargo for our credit card processing. They keep trying to jack up our base rate & every time we complain they drop it back down (now 2%). Seems like they’re very high on the interchange fees though which really kills us.
Our net credit card processing costs when averaging Google, Paypal & Wells Fargo seem to be about 4.5%, which just sucks.. So many people use bonus cards with interchange fees.
I have not yet tried negotiating lower interchange fees with Wells Fargo, but will attempt to do that.
Sticking with paypal, thanks