Google Readies GBuy, Online Banking Update

by: David Jackson

Excerpt from today's One Page Annotated Wall Street Journal Summary (which you can get emailed to you every morning by signing up here):

Google Gets Ready to Test GBuy, A New Online-Payment Option

  • Summary: Google is planning to launch a test version of its GBuy online-payment service as early as this week. Merchants that accept GBuy will be highlighted in Google's search results, and Google users that purchase from a merchant that accepts GBuy will be channeled through a different checkout process. "Google plans to charge merchants a 2.2% commission on a sale, plus 30 cents per transaction using its payment service, according to people briefed on Google's pricing. That is higher than Pay-Pal's lowest published rate of a 1.9% commission plus 30 cents per transaction."
  • Comment on related stocks/ETFs: Negative for eBay (NASDAQ:EBAY). Although eBay's PayPal already has over 100 million users, a bundled offering of GBuy and AdWords could be highly attractive to merchants, capping PayPal's growth prospects. Expect limited impact on Google's stock (NASDAQ:GOOG) because (a) this product ("Google Wallet") was widely expected by the market, and (b) investors will likely wait for evidence that the service is getting traction.

Online Banking Gets More Sophisticated

  • Summary: Yodlee, which manages online services for many banks, is introducing a product today that allows customers to track spending accross multiple accounts held in different institutions, make same-day bill payments, and pay bills from their bank's web site with a credit card. CheckFree and Online Resources are also improving their offerings with aggregation and personal finance tools.
  • Comment on related stocks/ETFs: There are two ways for investors to "play" the increasing sophistication of online banking and the resulting concentration of assets by the banks that offer the best tools, rates and commissions. First, buy the stocks of the third-party service providers CheckFree (CKFR) and Online Resources (NASDAQ:ORCC). The risk: they don't "own the customer" and can easily be swapped out for a competing service. Second, buy the stocks of institutions you expect to do the best job of accumulating assets. One possibility: the online brokerages Ameritrade (NASDAQ:AMTD), E*Trade (NYSE:ET) and Schwab (NYSE:SCHW), all of which are moving aggressively into online banking, mortgates and other forms of asset and liability accumulation.