Update: Google to merge Checkout with Wallet

The company wants to have a single e-payment service

Google is merging its Checkout and Wallet electronic payment services to consolidate them into a single product that works both on Web browsers and mobile devices.

The company is also in the process of making Wallet the payment tool on Android Market, YouTube, Google+ Games, and other Google sites where e-commerce transactions occur.

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Checkout was launched several years ago as an online payment platform, designed primarily to work on conventional web browsers, while Wallet made its debut in September of this year as a payment application for mobile phones.

Shoppers should use their Wallet account credentials on sites that also accept Checkout, while people who only have a Checkout account will be able to transfer their account to Wallet the next time they log into the service, Google said in a blog post.

The integration between Wallet and Checkout will be transparent to merchants, the company said.

"Early next year, we will work closely with our merchant partners to switch to the Google Wallet logo and share details on new and upcoming features," wrote Ben Lee, Google Wallet product manager, in the blog post.

The start of this transition comes at a critical time for both merchants and shoppers -- right at the beginning of the very busy holiday season.

Thus, it will be interesting to see if these changes improve the user experience for Wallet and Checkout shoppers and merchants or whether it creates confusion.

Google has posted an FAQ page about the transition plan, where it addresses a number of issues in more detail than in the blog post.

Google knows that the holiday shopping season is a particularly bad time for online payment systems to malfunction, so it has most likely kept the initial integration work between Wallet and Checkout to a basic, simple level, said Aaron McPherson, practice director for Payments and Security at IDC.

The announcement seems to indicate that at this point Google is mostly rebranding Checkout with the Wallet name, and not doing anything radical on the back end like ripping out the Checkout system and rebuilding it with a different Wallet design, he said.

"It looks they are going slow with the integration," he said. "I'm sure they won't disable anything within Checkout, so it should work as it did before."

Overall, the move makes sense. "I see it as a natural progression of their strategy," he said.

One goal may be to tie Google Offers, the company's online coupon service, with this unified payments platform, to pitch special deals to shoppers based on their transaction history, McPherson said.

"If Google can get people to use [their e-payment system] more, it'll have more data, which in turn will make Offers more relevant and attract more merchants," he said. "I think they're trying to get that virtuous cycle going."

Google Checkout's launch in 2006 generated a buzz as a "PayPal killer" but it has never come close to fulfilling that prediction. "The main challenge for Google is to get more adoption from buyers and merchants," McPherson said.

Juan Carlos Perez covers search, social media, online advertising, e-commerce, web application development, enterprise cloud collaboration suites and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

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