GOOGLE Inc, the most-used Internet search engine, will start an online payment system this month that will challenge EBay Inc's PayPal and let Google offer more targeted ads, an analyst wrote.

GBuy, which will begin on June 28, will handle purchases between shoppers and merchants, RBC Capital Markets analyst Jordan Rohan wrote in a note to investors. Participating sellers will be listed as "trusted GBuy merchant" in Google search results, he said.

Chief Executive Officer Eric Schmidt has confirmed that Mountain View, California-based Google is working on a payment system to make it easier for users to buy products online. The move counters an initiative by EBay, the world's largest Internet auctioneer, which last month formed an alliance with Yahoo! Inc for Internet advertising and online payments.

"Consumers now view Google as the main starting point for the Internet," Rohan, who rates Google shares "outperform," said on Friday in an interview. "That centrality gives Google a huge advantage."

Shares of Google fell US$6.73 to US$386.57 in Nasdaq Stock Market composite trading on Friday.

They have fallen 6.8 percent this year. EBay stock dropped 64 cents to US$30.58 and Yahoo, whose Website is the most-visited in the United States, fell 8 cents to US$30.37.

The product will generate transaction fees for Google and purchase data may help the company identify which search keywords are most likely to generate sales and increase the cost of those ads, Rohan said. He said he learned details of GBuy from merchants who are testing the software.

Google's Schmidt, 51, first said last June that the company was developing an online-payment service. Last month he said the system, which doesn't yet have a name, isn't a "stored value" system similar to EBay's PayPal.

The company has registered the domain name googlepayments.com, according to Internet registration records.

"We are experimenting in making the whole advertiser buy cycle faster," Schmidt said at a conference in Las Vegas. "If you get a stop watch and you time how long these things take, they take way too long in an online, instantaneous world."

Yahoo on May 25 agreed to exclusively use EBay's PayPal system. In return, EBay agreed to use Yahoo software exclusively to post ads on its site.

http://www.shanghaidaily.com/art/200...val_PayPal.htm

Anyone else on GWW thinking that this is going to be useless for adult webmasters?

Regards,

Lee