With what some have described as a "predatory pricing model" and rates lower than credit card processing fees, Google's new online payment service Checkout officially launched today. The competitive rates sound like good news for consumers.
Update: Like Paypal, you can't use the service to pay for adult products or services. But as a number of BB readers wrote in to point out (comments after the jump), some of the categories of prohibited content are described in ways that seem remarkably broad:
Pornography and other sexually suggestive materials (including literature, imagery and other media); escort or prostitution services
"And other sexually suggestive materials"? Meaning Nabokov's Lolita, or other classic literary works that include erotic content? With language that loose, perhaps a copy of Harpers with naked Britney Spears on the cover would be verboten -- not to mention fine art nude prints, or any number of popular music CDs or movie DVDs not regarded as pr0n.
A ban on "occult goods" ("Materials, goods or paraphernalia for use in satanic, sacrificial, or related practices") seems similarly troublesome. Would that apply to Coop's dark-lord-lovin' "devil babe" stickers? Or a hardcore black metal CD ("Music to eat babies by")? How about incense?
Snip from NYT story by Saul Hansell:
Google is charging merchants 20 cents plus 2 percent of the purchase price to process card transactions, less than most businesses pay for credit card processing. Banking industry executives say that credit card processors typically pay MasterCard and Visa a fee of 30 cents and 1.95 percent for every purchase, so Google will be subsidizing many transactions.
Reader comments: Chris Smith says,
Don't know that 'predatory' is appropriate here. Google can maintain this pricing as long as the adwords return the value. Usually, predatory pricing is there to change the market conditions so that you can raise prices later. Your quote hints at this - it talks about 'cost the predator' more during the low price phase. But if Google makes its money back on adwords, it can maintain this pricing forever. This is not predatory pricing - it's tied selling.
Phillip K. says,
The shocker is not really Google Checkout predatory pricing, but the "content policy," or what you can't buy (or more specifically sell). There is the standard exclusion of nasty stuff that you will see anywhere, but in numerous places it is deliberately ambiguous and broad, and would seem to promote an agenda.
Examples are "tobacco and cigarrettes" and *related products*. So does that mean all those zippo lighter collectors are left out in the cold? Under "weapons" knives are not allowed. So does that include pocket knives, leathermans, and cutlery? Maybe they should have thrown in nail clippers for good measure. Under the "Hacking and cracking materials" would the "how-to guides" and "information" provisions prevent me from selling a guide to defeat censorware like which prevents access to Boing Boing? What about books on security?
There is more implied censorship with the prohibited selling of literature and materials that "Promote intolerance or hatred." What does that mean? Especially when it's torwards the "other factors" listed above. Who is that? I'm surprised that this has not received more mention, as it appears more restrictive than what eBay allows. Witches will probably will have a hard time with the prohibited "occult goods" and "related items," But I don't care about that, as I was happy to see the witch melt at the end of Wizard of OZ. Oh, wait, am I showing intolerance torwards witches?
Donnie Cameron says,
I welcome Google's action, which hopefully will turn into the beginning of the end of credit cards. I am surprised that with all the technology at our disposal merchants and consumers still have to send credit cards so much money. The reason credit-card transactions are so expensive is that they are low tech (easy to cheat) and there is no competition. An open standard for exchanging money would serve the world better.
Anonymous and cranky says,
The comment about end of Credit Cards is ludicrous. The very first thing Google Checkout asks you for is your --- credit card information. If anything this is a continuation of the credit card business. If anything paypal provides an alternative to credit cards since the primary funding source is your checking/savings account.
Please at least remove that comment about google checkout equals "end of credit cards."
Steve S. says,
Elaborating on Philip K's comment, there's two categories that concern me:
1) Occult items. Who gets to define occult? I'm Roman Catholic, and I've heard other Christians call sacramentals (scapulars, relics, etc) "occult" items before.
2) Subscriptions. I pay for my dynamic nameserver ( http://ods.org ) through a Paypal "subscription". Does that count? What about my premium subscription to This is True ( http://www.thisistrue.com )? Why would Google care about that?
I know it's difficult to craft a policy that covers all the bad situations without screwing with the good ones - but in these two areas I really would expect more understanding from Google.
Andrew I. says,
I'm very concerned by this actually. You could say that the area that promotes intolleranace of others could include any religous item, and that would include athiest material, christain, muslim and any other religon. I'm curious why google has chosen to restrict areas that are perfectly legal in most areas. I'm also perplexed that they would put adult pornography in one area, then child pornography in another. Child porn is illegal anyway, and wouldn't it be covered in pornography? They don't list movies and music copywrite violations in different catagories do they? Any chance we could get a comment from Google on why they choose what they did, or an interview with one of you?
Google's checkout also doesn't accept "occult goods". Does this mean that I cannot sell a copy of my Tsjuder CD, called "Kill for Satan", or is that already excluded by the "Offensive goods" clause ("Encourage or incite violent acts" and or "Promote intolerance or hatred") Guess I have to create a Perl module called Google::CheckOut::Filter::MetalCDs so a webshop can filter the items they want to sell through checkout. There won't be much left to sell then ;-)
Ruth Waytz of coopstuff.com says,
I don't know why Google (or anyone) feels the need to qualify and censor the goods to be bought/sold at all. Why not let the MARKET decide who wants to by what, and Google take a cut of everything they process? I must be crazy, thinking that we should all be free to buy and sell what we want and that Google is stupid for losing revenue based on some vague moral posturing. Interesting to see Google has turned into the monster to which it was so adamant about being the alternative. It's just alarming how little time it took.
Bill Simmon says,
Broad language in the prohibited content list doesn't necessarily mean Google is promoting any particular agenda. It could simply be that they want to cover their asses. By listing "sexually suggestive materials" on the list, they are free to permit Nabokov's Lolita, but restrict other, unexpected items that their lawyers can't think of just now. Yes, they are also free to prohibit the sale of Lolita using their service, but I imagine Checkout users would probably react to that with some ferocity. The benefit of keeping language broad rather than including an explicit laundry list of prohibitions is that it gives the company some discretion over how the policy is applied. If they *apply* it too broadly, then there is reason to sound the alarm. See the US Constitution for another example broad, discretionary language being favored over a detailed list (though in that case it's a list of rights, not prohibitions).
John G. says,
The ZDNet states Eric Schmidt is quoted saying
willing to lose money on transaction fees because it felt the package would increase advertising spending…The math works because we can have lower prices and higher volume
Doesn't this remind you of some other major business' pricing strategies?
Another category that's deliberately vaguely defined in their content policies is "Miracle Cures", described as "Unsubstantiated cures, remedies or other items marketed as quick health fixes." Who at Google gets to arbitrate quackery? This is a company whose company cafeteria serves its employees Kombucha tea daily, and they're worried about its service being used to sell "remedies"?
John G.'s comparison of Google's pricing model to Walmart misses the mark. Google's pricing system doesn't depend on squeezing workers, and are we really worried that they could put mom and pops like Paypal (a dishonest company if I've ever met one) out of business? Context matters in issues like these.
Joe Rybicki says,
After reviewing Google Checkout's prohibited transactions, I'm wondering if it might be more efficient for them to instead post a list of -allowed- transactions. Far as I can tell that includes CDs -- wait, no, just -some- CDs -- and books -- oh wait, no, just -some- books. I mean, there's an entry called "Regulated goods." What, in this deliciously litigious society of ours, is -not- regulated? It seems to me that this system is so restrictive as to be utterly impractical for any but the most specialized use.
Bryan Larsen says,
The credit card companies charge higher prices to companies with higher chargeback rates. Adult services generally have much higher chargeback rates, so google is simply trying to keep their prices low. What would be nice would be to see google set up tiered pricing so that they can accomodate everybody and be as non-disciminatory as the credit card companies will let them be.
Adam Simon says,
While it's obviously important to note all the bizarre goods Google may try to restrict from Checkout purchases, many of the commenters are reacting as if Google is attempting to ban these products outright. Checkout is but one (very small, at the moment) method of payment, and if they are too restrictive with it, it will simply wither and fade. Obviously, it should be watched, but this is not the end times, folks. Visa will continue to be happy to provide you with the ability to purchase all manner of "restricted goods" for many years to come. If Google Checkout starts misbehaving - for they've not actually *done* anything objectionable yet - stop using it, and it will go away or adapt.
For what it's worth, I tried to set up an account with Google Checkout for my China-based business, but learned that the service is restricted to American Social Security card holders.
The Google Checkout Merchant Support Team (firstname.lastname@example.org)
Thank you for your email.
At this time, only merchants with a United States address and bank account can integrate and process transactions through Google Checkout. We look forward to making the service more widely available in the near future.
The Google Checkout Team
Anothony Hall says,
Actually Paypal makes lots of money from adult products on ebay, they make a token performance of not doing business in this area. I happened to find myself in the position of needing to auction off a bunch of adult products on ebay and I discovered a few interesting things. 1. Most customers for the adult product section will send paypal payments intstantly without being prompted, it's clearly the norm. 2. While the buyer of an adult auction isn't offered an automatic link to paypal if they type the auction number in when manually making their paypal payment ebay will update your sold items list to reflect the payment 3. I had to work with customer support to get my items to list, the problem eventually turned out to be a mention of Paypal in the text of my standard seller policy. i.e. they have a filter that prevents sellers in the adult section letting buyers know that the whole paypal policy is a sham, most of them seem to have figured it out anyway.