Google confirms work on Internet payment service

Google has confirmed that it is developing an online payment system, although it says it has no plans to take on eBay's PayPal service.

Following media speculation about such a move, the chief executive of the Web search giant, Eric Schmidt, told reporters in the U.S. Tuesday that the company is working on payment services that would extend its existing online products and advertising services.

Representatives for Google in the U.K. confirmed Schmidt's remarks but declined to give further details.

Google does not plan to launch a person-to-person stored payment system that would compete directly with PayPal, but it is working on a payment system to improve the way e-commerce is done, Schmidt told reporters, according to the U.K. representative.

EBay's PayPal service allows businesses and individuals to send and receive payments online using existing financial infrastructure such as bank accounts and credit cards. Founded in 1998, PayPal now claims over 71 million account members worldwide.

Schmidt said that Google's aim is to solve other problems with e-commerce, according to the representative. Much of the search company's activity today revolves around online advertising and tools such as its Froogle online comparison shopping engine.

Founded in 1998, Mountain View, California-based Google has been credited with disrupting business models with its innovative services, pushing technology stalwarts such as Microsoft and Yahoo to rethink their search and e-mail offerings.