Google Checkout free for the holidays

In a move that could be viewed as an early holiday gift for online merchants and a heaping lump of coal for eBay, Google Wednesday announced that it will process payments for free through Google Checkout, its rival service to PayPal, until the end of the year.

Google announced the news in its Google Checkout Blog. "With the holiday season quickly approaching, we wanted to do something to say 'thank you' to our merchants. To help out during this very busy shopping season, we are processing all of our merchants' Google Checkout sales for free during the holidays," wrote Product Marketing Director Gavin Chan.

The regular fees for Google Checkout vary. If you're a merchant participating in the company's lucrative AdWords program, you may process up $10 in payments for free every dollar they spend on AdWords. Non-AdWord merchant, or those who exceed the limit, pay 20 cents per transaction plus 2% of the payment being processed.

PayPal's fees start at 2.9% plus 30 cents per transaction.

According to reports, rumors of Google's announcement had been floating around for at least a week. Notably, PayPal, owned by eBay, announced on Monday a holiday incentive program of its own aimed at consumers. "Millions of PayPal customers will be eligible to receive cash rebate offers up to $20 when paying with PayPal on qualifying merchant Web sites in North America ... . Additionally, consumers will find free shipping from some of the Web's most popular brand names when they pay with PayPal this holiday season," according to a release from PayPal.

Google's free online-payment-processing ploy is presumably an attempt to take a bite out of PayPal's market share by coercing merchants to give the initially unpopular Checkout service another chance. Soon after its launch last June,merchants and shoppers complained it was often taking too long to complete sales transactions, and that sometimes orders were cancelled unjustifiably and without warning.

PayPal isn't the only company seeing Google make some aggressive moves into its territory of late. The company this week has announced a program for selling ad space for print publications as well as audio advertisements for radio.