Google: Checkout This

Checkout has also had its share of problems, and only 19% percent of users report being pleased with their experiences with the service, as compared with 42% of PayPal users.

Still, the Checkout service is an infant compared with PayPal, which spent eight years and hundreds of millions of dollars in venture capital getting to its current position. And while it may not be displacing PayPal yet, Checkout is off to a strong start, thanks to Google's solid backing, wrote JPMorgan analyst Imram Khan. "We believe Google's aggressive promotions and discounting spurred the respectable launch," he wrote.

Handing out cash to users, waving fees for merchants, and getting to ride on Google's homepage may be just what is needed to help Checkout take its game up a notch.

Giving PayPal a run for its money is one thing, but a widespread adoption of Checkout would have far weightier consequences. Google's domination of the search market puts it in a position to route users around particular Web sites entirely, letting Web surfers zig-zag around the Internet when looking for items. The growth of that type of purchasing behavior will take a heavy toll on e-commerce companies like eBay and Amazon.com(AMZN Quote).

Google rival Yahoo!(YHOO Quote), which maintains a retail outlet on the Stores section of its Web site may also feel the impact.

Google's latest bid to boost Checkout demonstrates the enormous resources the company has at its disposal. Highly profitable and deep pocketed, the company can afford to lose money offering promotions on a product that it considers to be strategically important.