The core of Google's business is selling advertising
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Search giant Google has launched its payment service, Google Checkout, in the UK.
Checkout will compete with both the mainstream card processing services used by many online merchants and auction site eBay's Paypal service.
It is designed to boost Google's core money-maker, the selling of online adverts, by offering cheap order processing for its advertisers.
Until now, Checkout has only been available to US buyers and sellers.
"The starting point is our core products," said Google's UK consumer marketing chief, Obi Felton.
Checkout "is the conclusion of the transaction cycle" of consumers finding retailers through searches and advertising.
Google was unwilling to say when the service might expand into the rest of Europe.
Speculation
Google's dominance of the search market has led it to revenues of $7.1bn in 2006 - not to mention the evolution of its name into a synonym for internet searches.
Even so, its other services have yet to make anything like as much of a splash in market share terms.
Rumours were rife about a Google payments service - dubbed "GBuy" by bloggers - well ahead of Checkout's US launch in June 2006.
Much of the speculation focused on whether Google could use its search muscle to produce a "Paypal killer", to rival the way that eBay has used its dominant presence in online auctions to help drive Paypal's reach.
"If Google Checkout was positioned to kill Paypal in year one, they've got a long way to go," said Ed Kountz, senior analyst at Jupiter Research.
"But if their goal was to establish themselves in the market and work out the kinks (in the service), they've certainly done that."
Google staff are keen to play down the "Paypal killer" chatter - even in retrospect.
"There were plenty of sleepless nights going up to the launch," said Jerry Dischler, now Checkout's senior product manager for Europe but one of the launch team in June last year.
"We were moving forward so fast that (the rumour mill) didn't really touch us."
Leader of the pack
Still, Paypal remains the dominant single payments player in the US.
A Jupiter Research survey carried out in November and December 2006 found the majority of payments are still credit or debit card transactions processed through retailers' own systems.
Of end-to-end payments services - those which try to smooth the process of shopping online by storing payment information centrally - Paypal led the pack, with about 25% of the US online payments market.
Other players such as Billmelater took about 5-6% and Google Checkout was on 2%.
But Ed Kountz pointed out that if eBay transactions were taken out of the picture, the non-eBay share for Paypal drops to an estimated 8%-9% - still a comfortable lead, but less overwhelming.
"Checkout's history to date has been a bit like Paypal's evolution on steroids," he said.
Discounts
There had been early hitches with returns and cancelled orders.
These were factors, according to a JP Morgan report in January of this year, which led to relatively low US customer satisfaction with Checkout's service.
Still, the presence of Google in the payments market has driven a frenzy of offers and promotions, from Paypal, Google and their competitors.
Paypal remains the biggest name in online payments
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The US holiday season, for instance, saw Google offering free processing till the end of 2007 for retailers, and sizable discounts to consumers.
UK retailers will get the same offer, as well as the standard price break of £10 of orders processed for free for each £1 a retailer spends buying advertising through Google.
Competition
Google is also trying to take advantage of what could be Paypal's biggest reputational risk.
As market leader and provider of a fully-integrated payments system - running transactions and transferring money directly between buyers' and sellers' bank accounts - Paypal is by far the biggest target for fraudsters and abuse of its service.
Google Checkout, in contrast, works solely as a wrapper for regular credit and debit card transactions, offering to simplify the process by storing card data and shipping information centrally.
Its staff promise that they will "make buyers whole" if they suffer fraud, as well as representing retailers when they face the risk of losing money when a deal goes wrong.
And Google's Obi Felton is also at pains to stress that Google Checkout buttons tend to sit alongside retailers' other payment methods when it comes time for the customer to pay, rather than trying to supplant them.