Last week, I posted on how the battle between alternative payment methods Google Checkout and PayPal are about to find a new competitor from Amazon.com with its new “Pay Now” widget. But this isn’t the only story for Google Checkout and PayPal. After PayPal soundly beat Google Checkout during the end of October and the beginning of November, Google Checkout is back in the running.

The main reason, according to Hitwise’s Robin Goad, is to do with the fact that most of PayPal’s users come from its parent, auction site eBay:

Although the two sites are competitors, they have quite different sources of traffic. As you would expect, the majority (59.1%) of Paypal’s traffic comes from its parent, eBay (combined UK and US sites), with another 12.4% from Google (UK and US sites again). A further 11.7% comes from a combination of email providers, social networks and banks; but just 2.2% comes from non-auction Shopping and Classified sites. This compares with 45.3% for Google Checkout…

Apparently, despite its efforts to integrate with Web sites not connected with the PayPal or eBay brands, PayPal is still struggling to get beyond the fact that it is inextricably connected to an auction site.

Now, the graph above, and the Hitwise information, is for the U.K., but the traffic sources comprise U.K. and U.S. Web sites. And the data is still telling, as it shows a general trend. Google Checkout can leverage its search capability into an alternative payment coup. After all, ecommerce businesses that want to make things easier for customers can encourage purchases right from the search results. And, as I pointed out before, alternative payment is becoming popular with customers who do a lot of online shopping, but don’t want to spread their personal payment information around.

Interestingly, though, Hitwise points out that perhaps customers aren’t completing their purchases. Goad mentions that online data shows that after visiting Google Checkout or PayPal, some shoppers go to another online retailer:

[M]ore people currently visit another Shopping and Classifieds site after Google Checkout than after Paypal, and that the gap is widening.

So, while more customers visiting online retailers may have a look at Google Checkout, they may not actually be buying the item. They may be abandoning the purchase. But since PayPal is often associated with auctions and the famous “buy it now” feature, not many online customers appear to move on to another online retailer.

For now, it appears that the two will remain neck-and-neck, since traffic sources to their sites come from very different places. But who knows what will happen once Amazon really enters the fray.

Tags: alternative payment, online shoppers, Amazon pay now widget, ecommerce,
ecommerce businesses, online retailers