PayPal Not Worried About Competition from Google Checkout

Yesterday, CNET News ran an interview with PayPal's Chief Technology Officer Scott Thompson. There are several questions about phishing and security, but I thought the most interesting part was a question about competition from Google.

Can you comment on the competition you might be seeing from Google Checkout? Have you seen any loss of market share or revenue?
Thompson: Sure. The first thing I would say is payments are really hard to deal with. It's a business that is built around precision. There is no margin for error in anything associated with payments, and that's the relationship we have with both buyers and sellers on the eBay site and our customers and merchants on eBay. Beyond that I fully expect that because payments is such a big business, that all the competitors that we know of today are going to be there tomorrow, and there is probably going to be a whole lot more that people are dreaming of right now in start-ups in Silicon Valley and elsewhere.

So there is always going to be competition, and I actually love good competition. It raises your game to a higher level when you have good competition. So as it relates to Google Checkout, where as you would expect we are very aware of what they are doing, we don't think they are in a payment system business. We think they are specifically in a check-out business, and there is quite a bit difference between checkouts and payments. I would argue that we have such a lead in the business of global payments that if somebody wants to chase after us a little bit, I think they are going to realize it's hard to do, and I think they will fully appreciate and understand the head-start we have. Nobody here is overly confident, but I think what we need to do is have a strategy and focus on that and not on any competition.

In addition, we learn that micropayments are tough:

How big do you see the market for micropayments? It seems like you would have the infrastructure to do that more broadly. Are you seeing content owners like music or print publishers going in that direction?
Thompson: Micropayments is a remarkably big opportunity. I said doing payments is hard. Well, micropayments is extremely hard, and that is why nobody has cracked the code on it yet. It's just very, very tough to do. You probably recall 10 to 12 years ago the phone companies thought micropayments (would be a way to) extend their billing reach further into their customer set. But every phone company that tried that has realized that this is a whole lot harder than they thought, and they all backed off those initiatives. So, I think somebody at some point will come up with a real cute idea on this, and it will be one that changes the game. I think that's one where you stay tuned. It probably plays out two or three years from today

and PayPal currently has no plans to enter the world of online banking:

Is PayPal planning to move into online banking services?
Thompson: If you are PayPal, you can never say never. But I can tell you, we don't do online banking today. In the near term, we don't intend to do online banking. We have a rate payments business. We have tremendous future growth opportunities in the payment business that we are in. We are completely focused on that online payments business, and we view something like online banking as an adjacency that may be of interest some number of years from today. But now we are solely focused on online payments, and we don't want to be distracted.