eBay's ( EBAY) decision to ban sellers from using Google's ( GOOG) new online payment system is angering some of its longtime customers. The move, which was first reported Thursday by trade publications, highlights the growing tensions between the largest auction site and the No. 1 search engine. Last week, Google introduced Google Checkout, a service that Wall Street analysts say poses a competitive threat to eBay's lucrative PayPal business. "The feedback I've gotten from eBay users is that sellers don't want eBay to dictate their payment methods,'' says Ina Steiner, editor of the Web site AuctionBytes.com. Sellers on eBay message boards denounced eBay's decision. Typical was the response of a poster named 2kewl4ufool, who says, "Seems like our eBay is a little nervous
about Google Checkout.'' Poster WCDC added, "Bad, bad eBay. eBay wants to squeeze every last penny out of the sellers. I hope this comes back to bite them.'' eBay is evaluating whether Google Checkout complies with its Accepted Payments policy, which is designed to insure that only "appropriate'' payment services are used on its auction. An eBay spokesman says the company has no timetable for completing the review. The policy is designed to protect both buyers and sellers from fraud. "Payment services that are not permitted on eBay may, in fact, be outstanding services for consumers in other contexts,'' the policy says. "eBay's evaluation relates only to whether a particular service is appropriate for the eBay marketplace.'' Sellers and ecommerce experts question why such as review is necessary, given that Google already has a track record for accepting payments from consumers for services including keyword advertising. That background spurred the development of Google Checkout. "Google Checkout is a natural extension of this history,'' says Megan Lamb, a Google spokeswoman, in an email. "The service is designed to make online shopping faster, more convenient and more secure for Google users. We rigorously tested this new service before launch and have used this same service to process Google Video, Google Earth, Google Base and Google Store transactions for months.''
eBay's position angered Peter Togel, a South Carolina art gallery owner, who has sold on the site since 1999. He plans to quit selling on eBay altogether and move to a specialty art auction site that plans to accept Google Checkout. "I was not been happy with eBay and PayPal for a long time,'' he says in an interview. "You can see from the changes on their Web site a direct negative impact on sales. I am not surprised sellers are frustrated.'' Even merchants who aren't angry with eBay may wind up using Google Checkout anyway. Online merchants are increasingly offering more than one type of payment service to consumers. Offering only one is analogous to a bricks-and-motor store only accepting cash, says Marwan Forzley of Moda Solutions, a provider of payments services. eBay, which has recently signed an alliance with Yahoo! ( YHOO), remains dependent on Google to drive traffic to its site. Google also is reluctant to publicly anger eBay, which has been one of its largest advertisers for years. Shares of eBay already have taken a beating this year, tumbling almost 40% because of concerns about Google's competition with PayPal. PayPal head Jeff Jordan's decision to leave the company for personal reasons only added to Wall Street's concerns. The shares fell 6 cents to $26.79.