Google Purchases won't compete with PayPal? Really?

During the webcast for the Analyst Day at Google, Eric Schmidt said on a couple occasions that Google is not interested in competing with PayPal because they are already doing a great job.  I'm still not convinced Google isn't targeting PayPal.  Even if this service doesn't aim directly in that direction, Google Base, Google Purchases and Google Talk does look a lot similar to eBay, PayPal and Skype doesn't it?

The fact this service allows merchants to easily accept payment for items online -- with Google handling the credit card transactions -- makes me believe that a significant part of this service will at least partly overlap what PayPal does.  Google Purchases may not facilitate simple user to user transactions like PayPal, but user to merchant transactions sound like fair game.

What do you think?  Will Google at least partially compete with PayPal, or will it truely be a service that does not compete?