There's been a ton of buzz over the idea that Google was working on a PayPal competitor, and it appears that Eric Schmidt and "the powers that be" at Google finally thought it was worth speaking to the press on the matter. In discussing the Google Wallet concept, we did note that it came days after rumors of a Google iTunes-like offering as well, and that actually might tie into what Google is working on. Earlier today, there was increasing speculation that Google was more interested in a system to deliver micropayments for content than direct person-to-person financial transactions -- and that seems to be more along the lines of what Google is admitting to. While not clearly laid out, Schmidt did say that the solution they were working on wasn't really a PayPal competitor, but more of an extension of existing programs. Many people have been saying that it's likely an extension of the payment system they use for handling their paid search ad program, but extending it out to other types of content. This would also fit with Google's new video storage offering, which promised to allow people to charge for the content that people downloaded. While less surprising, this is still a bit disappointing. Micropayments seem to go in and out of fashion every few years, but never actually seem to catch on, mainly because not only do they add a monetary expense, but they have a mental transaction cost in making people stop and think about whether or not it's worth purchasing. That cost is much more expensive than most people think. Also, any micropayment-based system always leaves itself open to competitors who realize that it's going to be much more effective to give the content away, and make money elsewhere.
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