Google may launch its widely anticipated online payments system Google Wallet before the holidays, an analyst said Friday, giving the search giant yet another way to profit from its widening Web empire.
The service is expected to rival eBay’s PayPal, which allows web users to transfer money from, say, consumer to merchant without using a credit card. PayPal users have to credit their accounts using bank accounts or credit cards.
Google CEO Eric Schmidt has said Google Wallet will not be a PayPal clone. Unlike PayPal, analysts speculate that transactions would be limited to ones between businesses and consumers. The service would probably not allow more personal uses, such as a friend sending money to a friend. But like PayPal, it would likely be a stored value account.
Dan Schatt, an analyst with Celent, a research and consulting firm, predicts the search giant will release the service by the end of the first quarter, if not for the holidays. Google spokesperson Sonya Boralv said there was no announcement.
By launching this service, Google would likely control even a greater share of user activity on its site. With the pay-per-click model it popularized, the company collects a fee anytime a user clicks on an ad. With Google Wallet, a consumer that clicked on an ad for a product could purchase that product without leaving the site.
However, both the user and the merchant on the other end would have to sign up for the service in order for the transaction to take place, Mr. Schatt said. The money would move from the consumer’s account to the merchant’s, with Google pocketing a fee.
Google, which posted $1.05 billion in revenue in its most recent quarter, derives most of its revenue from ads, mainly pay-per-click ones (see Google Revenue Jumps 96%). With Google Wallet, the pay-per-click model could evolve into a pay-per-purchase model, suggesting that merchants would pay Google a fee for products purchased.
Big Payoff
The move would give Google a strong hold on its customers in more ways than one. The service would provide the company with an additional revenue stream. But it would also provide the search giant with information on customer purchase habits and patterns.
That information, in turn, could help the Mountain View, California, company with its targeted advertising service, AdWords. One possible sign that Google Wallet is imminent: A posting on the company-written Google AdWords blog asks users to transition from using an AdWords login to using a Google Accounts login before January 15.
There’s also potential for Google to blend the service with other enhancements it’s already made to its offerings. Mr. Schatt said Google could add its voice capabilities to the mix, allowing it to integrate pay-per-call ads, which are online ads that direct users who click on them to a call with a live person. eBay is planning a similar scheme with its recent acquisition of VoIP provider Skype.
Another big announcement expected from Google is a service that would take the search company into the world of classifieds and online selling. That service, expected to be called Google Base, will marry well with any online payments service.
Google Wallet combined with Google Base could offer sites with voice buttons connecting buyers and sellers, making it a complete e-commerce platform. Google already runs Froogle, a shopping search engine, and offers a form-fill function on its toolbar that stores encrypted information.
The new offerings could end up making the firm a strong competitor to eBay, which boasts PayPal and Skype. It also means Google, the No. 1 search engine controlling more than one third of the search market, could become an entry point to a lot of e-commerce, something that no doubt would give rival portals much to worry about.
Users could search for a product on Google, discuss it with the seller, and buy it using Google wallet without leaving the site, or that’s the idea anyway.
