Alternative to Services Like PayPal

PayPal was one of the first online payment services available and has become one of the top-ranking e-commerce companies in the United States. However, increasing customer dissatisfaction with PayPal's fee structure has inspired other e-commerce corporations to launch their own online payment services. As of 2009, PayPal's biggest competitors are Google Checkout and Checkout by Amazon. PayPal also faces a host of smaller competitors that may be attractive to buyers and sellers.

  1. Google Checkout

    • For online shoppers, Google Checkout works differently than the PayPal model of having an account with predeposited funds. You store your credit or debit card information online and make purchases via your Google Checkout account without your credit card information being given to the merchant. It provides a much more secure way to shop online and reduces the risks of credit card fraud with SSL security that is on par with major banking websites. However, unlike PayPal, Google Checkout does not offer the option to link directly to your checking or savings account.

      For customers who receive payments online or have a Google AdWords account, Google Checkout offers some key advantages. As of this writing, the fee structure of online payments is 2 percent of the sales price plus 20 cents compared to PayPal's 1.9 percent to 2.9 percent plus 30 cents per transaction. Google Checkout integrates perfectly with Google AdWords accounts and you can pay transaction fees with your AdWords/AdSense earnings. Having both also increases your available discounts on preferred services and enhances your potential sales by displaying a Google Checkout cart next to your ads.

    Checkout by Amazon

    • According to the Amazon Payments website, "Checkout by Amazon is a complete e-commerce checkout solution that provides your customers with the same secure and trusted checkout experience available on Amazon.com today." For online shoppers, Checkout by Amazon offers the same ease use, stored information and confidentiality of Google Checkout. A big attraction of Checkout by Amazon is that it takes your stored information with Amazon.com and allows you to make purchases all over the web. Since Amazon.com is already partnered with a significantly large number of other online retailers, the potential for acceptance on shopping sites is higher than Google Checkout.

      For online entrepreneurs, Checkout By Amazon offers a fee structure of 2.9 percent plus 30 cents for all transactions over $10. However, they do offer discounts based on sales volume that goes as low as 1.9 percent plus 30 cents for all transactions for monthly payment volume over $100,000, according to their website. For transactions under $10, the fee is 5 percent plus 5 cents.

    Other Competitors

    • It is worth noting that there are other, smaller companies that have popped up over the past few years in an attempt to achieve PayPal-like success. As of 2009, the most noteworthy of these are Digital River, NetTeller and AlertPay. However, like the previously successful BidPay that was put out of business by PayPal and then unsuccessfully relaunched again in 2006, most of the companies are considered unreliable and have nowhere near the amount of popular acceptance as Google Checkout or Checkout By Amazon.

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