Thursday, January 11, 2007

Changes in PayPal Buyer Protection!

eBay recently announced an increase in Buyer Protection for purchases made on ebay using PayPal. I won't go into the details of the new offering because you can get that information here. What I want to discuss is the motivation behind the move. I believe eBay is trying to accomplish two goals with this announcement:

#1. They are trying to address the growing complaints from buyers that the marketplace is no longer a safe place to purchase product. The deal doesn’t assure you will receive your product it just says you won’t be out any money. Combining this increased purchase protection with recent moves by Trust and Safety to stamp out fraud on the site seems to make since. This is more of a marketing move than anything else.

#2. I believe there is a growing fear at eBay that Google will get enough traction from their Checkout service to have some impact on PayPal. I believe they made this move to try and separate them more from Checkout. Rick Aristotle Munarriz from The Motley Fool thinks the same thing as he states in his recent article eBay Doubles Down on PayPal

My theory is that if you were to bring in eBay for questioning, it would ultimately break down and concede that "Google Checkout made me do it!"

This announcement by eBay is just another movement in a long dance between Google and eBay that “should” eventually end in an embrace between the two. PayPal needs Google Checkout to expand outside of eBay and Google Checkout needs PayPal to reach critical mass with buyers. I think this pairing is inevitable but eBay will resist it as long as possible.