Online Merchants' Middlemen

By Rob Pegoraro
Thursday, November 29, 2007

Buying things online can make a simple thing absurdly complicated.

Different sites sell the same product online or claim to find the lowest price, and the varying delivery options offered by these retailers can make the search for the perfect deal so confusing that you wind up buying nothing.

And now you have yet another factor to consider: not where you shop, but how you'll pay.

Fortunately, this newest complication can also trim a few bucks off your bills -- quickly and easily -- if you take proper advantage of it.

For years, there's been no real choice in how to purchase stuff online: Either you cough up a credit card number or you get nothing. But now a few money-transfer services want to carve out a bigger chunk of the business for themselves. And they're holding out some attractive incentives to make that happen.

None of these three services -- eBay's PayPal, Google Checkout or Bill Me Later -- can save you money on their own. None will let you spend a cent without linking your bank account to one of the online services; they only provide a different path for your money to flow to an online merchant.

(They can provide a little more security, in that merchants don't see your account numbers, so you can't lose them to hackers in the event of a data breach.)

It's the retailer, not the customer, who has the real motivation to encourage the use of these payment services: They come with lower transaction fees than most credit card purchases.

So to get users into the habit of using them all the time, not just for the occasional auction or person-to-person transaction, online shops and these services are kicking back some of their proceeds to consumers. It's the sort of freebie you might have thought had vanished in the late 1990s dot-com implosion.

PayPal is making one of the most aggressive marketing efforts this year. It's offering 20 percent rebates on purchases at a variety of online stores, including Barnes & Noble, and, through as late as Dec. 10. PayPal's offer doesn't specify an expiration date and caps the total rebate at $50 per account; see for the fine print.

These rebates, unlike the ones we've grown to hate in physical stores, don't require mailing any paperwork. But you will have to wait until as late as Jan. 31 for the money to appear in your PayPal account, the company says.

Using Google Checkout, a newer and less popular competitor, provides a different array of discounts: Dozens of retailers accepting Google Checkout have agreed to knock $5 to $50 off transactions with this PayPal rival. The usual discount, however, is $10, and you have to buy by Dec. 17 (

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