Yesterday, Andy Beal observed that Google Checkout has increased its 2009 fees and terms and will be providing fewer incentives for retailers to use the transaction processing tool, starting May 5, 2009.
Google Checkout is a tool for processing online transactions. For shoppers, the appeal is that it reduces obstacles to the purchase process. Shoppers register all their personal and billing information, Google will store it, and as long as they are logged into their Google accounts there is no need to fill out purchase information forms on a retailing site where Google Checkout is available.
For e-retailers, there are a couple benefits to using the system:
- Advertising visibility. For retailers who engage in paid advertising through Google AdWords, a badge appears under their ad on SERPs designating the retailer as a Checkout provider. A number of studies have shown that these Google Checkout badges may serve to increase both click-through rate and sometimes conversion rate. The reasoning is that the badge draws visual attention to ads that feature them and Checkout users gravitate toward retailers whom they know offer it as a method of payment:
- Cost incentives. Up until now, Google Checkout has offered free transaction processing for a portion of purchases through retailers who also use Google AdWords.
However, now the partial free processing incentive is no longer available to AdWords advertisers. In addition, fees have increased per unit of Checkout sales. The new Google Checkout fees- beginning May 5, 2009- are as follows:
Monthly Sales Through Checkout: Fees Per Transaction:
< $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 1.9% + $0.30
This is probably an effort on the part of Google to start recouping investments made at the initial roll out of the Checkout service into the online transaction space. Checkout faced some serious obstacles to entry back in 2006- particularly to competitor PayPal- and it spent some significant budget promoting it. Much of Google’s promotion of Checkout included coupons and waived fees for advertisers to give it a try. Since then, Google’s share of use among top online merchants (reported by an Internet Retailer survey) has continued to rise. And now is the time to start bringing in higher margins.
The major concern is that too many retailers might abandon Google Checkout now that these incentives are about to be removed. Google is betting that retailers have become loyal enough to Checkout to stick with it, even with higher prices. Considering how many retailers are barely hanging on merely thanks to their online sales during the economic downturn, that may be a safe bet.
Are you a user of Google Checkout? If so, will you continue using it with the new fees?