Google Checkout rated low in customer satisfaction

Google's Checkout ranked well below rival online payment service PayPal in customer satisfaction in a survey of online shoppers conducted by J.P. Morgan.

Among Checkout users, 19 percent rated the service as either very good or good, with the rest calling it average, poor, or fair, a result characterized by J.P. Morgan as "a very low level of satisfaction with the product." By contrast, PayPal, which is owned by eBay, fared better, with 44 percent of its users saying it's very good or good.

The survey findings surprised Google because they differ significantly from its internal records, which show that less than 1 percent of Checkout transactions have a problem, said Benjamin Ling, Checkout product lead. Google remains fully committed to Checkout and to continually enhancing it, he said.

Google introduced Checkout in June of last year after more than a year of speculation about its plans to enter the lucrative online payments market for business-to-consumer transactions, PayPal's stomping ground. It was one of the highest-profile product introductions for Google in 2006 and is seen as a clear example of the company's efforts to find new sources of revenue beyond its core business of search engine advertising.

However, complaints about Checkout began to surface soon after its launch, and by August, a considerable number of merchants and shoppers were saying that the service often took too long to complete sales and that it sometimes canceled orders unjustifiably and without warning.

J.P. Morgan praised Google for aggressively promoting Checkout and achieving a strong adoption -- 6 percent of respondents -- in a relatively short time but warned that Google must improve its customer satisfaction. "Google may need to shore up its payment operations before building lasting user loyalty," reads the report, released on Wednesday.

Despite a strong start in user adoption, Google will have to continue promoting Checkout heavily because the usage and brand awareness gap with PayPal is significant. PayPal, which has been on the market for much longer, was used by 42 percent of respondents, a rate almost seven times higher than Checkout's. In terms of brand recognition, about 80 percent of respondents are aware of PayPal, compared with only 45 percent for Checkout.

In conclusion, PayPal, at least for the foreseeable future, will see "minimal impact" from Checkout because only 2.3 percent of respondents indicated an intention to use Checkout instead of PayPal, according to J.P. Morgan, which polled almost 1,100 online shoppers who are 18 years of age and older. By contrast, 43.4 percent of respondents said they plan to use PayPal but not Checkout, and 18 percent plan to use both.

"[Checkout's] lower brand awareness coupled with its low satisfaction rate leave much room for improvement. As such, we do not believe Google Checkout presents a threat to PayPal at this time," the report reads.

This story was updated on January 18, 2007