Google GBuy online payment system to lock-in AdWords advertisers and usurp consumers via discounts and rebates

Google plans aggressive launch of GBuy.


While today’s Wall Street Journal “story” on Google’s projected release of its GBuy online payment system tomorrow reads more like Google’s own press release (a Google tradition is to pre-announce via “briefings” to favored publications such as The Wall Street Journal, The New York Times, The Washington Post), an impending Google strategy to use GBuy to further strengthen its hold on its advertisers and to usurp online consumers from e-commerce companies, such as eBay and Amazon, now competitors, can be gleaned.

According to the report, which quotes “people briefed”:

Google plans to charge merchants a 2.2% commission on a sale, plus 30 cents per transaction using its payment service…That is higher than Pay-Pal's lowest published rate of a 1.9% commission plus 30 cents per transaction.

Google's rate doesn't include the discount pricing that the company will give to merchants participating in its AdWords advertising program…Merchants who spend money on Google's ad program could get the cost of payment processing through Google dropped to nothing…

To attract consumers, Google plans to offer an unspecified rebate to people who complete online purchases using GBuy.

Google's choice of "rebates" as a discount mechanism for consumer use of GBuy is telling. By requiring individuals to "mail-in" a rebate form to Google, Google builds valuable offline databases of consumer information.

From a merchant advertiser perspective, Google aims to lock-in merchants as AdWords customers by not charging AdWords clients for GBuy payment processing. Additionally, Google is setting-up a two-tier system for its AdWords clients to favor those that are also GBuy merchants:

Consumers who search for items like "shoes" on Google's search site will see text ads with a symbol or icon designating advertisers that accept GBuy payments. Shoppers normally would have clicked on an ad and been linked to that merchant's Web site. Now, while they will still be linked to the merchant's site, they will go through a different checkout process integrated with Google if they choose GBuy for their transaction.

Google's incentives-based launch of its GBuy online payments system is designed, in one fell swoop, to gain and retain more AdWords customers, to set-up GBuy as the go-to default, and perhaps exclusive, online merchant "checkout process," to undercut eBay and, to usurp online consumers and to data mine consumer buying behavior.

SEE ALSO: Why does Google pre-release breaking news via single, favored media publications? and Google payment system to 'automate advertiser click cycle, the rest is history'  and Google GBuy specifics: 'Could be a game-changer'