Monday, June 20, 2005

Google Said to Plan Rival to PayPal, create Google Wallet

Interesting move, if true. This story first appeared in the New York Times.

This is just the sort of move Google needs to make to diversify its revenue streams. As my last post suggested commented, a number of people are concerned about justifying Google's ~$300.00 / share price.

The challenge is, and has been that Google's been adding more and more to the search experience, but little to divesifty their revenue stream. This could be the first major step in that direction, and a fast one.

The article comments that, (as we already know), Google and its Froogle shopping service are significant sources of customers for Internet stores.

The creation of a "Google Wallet" would help Google expand its reach by not just helping introduce consumers to the products they are searching for, but also to help they conclude the transaction, by facilitating the payment.

The article speaks of this move not just as if it's a rumor, but rather that it is going to happen, just the timelines and partners are unknown.

So where could this logically lead? PayPal accounted for ~6.0 Billion payment settlements in the first quarter of the year, and over $240 Million in Net Revenue to Ebay. Google could cut significantly into this stream. So it's a good way to expand the overall revenue streams.

But longer term, is this just a step? Could the longer term strategy include hosting the stores themselves, much like Yahoo stores, and making a little bit off each transaction? Could Google be looking at companies like ING and Emigrant Direct, and be considering that online banking is a logical move? It's easy to speculate, but transaction based revenue models certainly are in line with Google's business model, and a logical course for them to keep following.

ADDED at 7:30 a.m.

I just realized - if Google gets into this business, I have even more spam to look forward to!!! While writing the earlier note, I got 3 different invites to 'update my paypal password'; or 'unlock your paypal account' Woohoo, I can't wait!