How Google Checkout Work
- The transaction starts when a customer(Bob) go to the website of a small online retailer that sells collectible sports cards. Bob finds a card he wants to purchase and click the "buy" button.
- At this point, Google Checkout kicks in. The website has previously contracted with Google Checkout to handles all its checkout and payment processes. As such, the retailer has followed Google's instructions to inset the proper HTML code onto the site's web pages. The "buy" button is part of Google's HTML code.
- When Bob click the "buy" button, an electronic command is sent over the Web to Google Checkout. The service now takes over the rest of purchasing process, directing Bob's web browser to the payment service's website.
- Google Checkout now displays for Bob a shopping cart page. This page shows the item that Bob wants to purchase, as well as other information regarding the purchase. Bob can, if he wants, return to the retailer's website to resume shopping, or he can click the "checkout" button to finalize his purchase.
- Bob, his shopping finished, clicks the "checkout" button. This displays another page on the Google Checkout website, this one showing all the items in Bob's shopping cart, along with shipping/handling charges and sales tax (if any). This information is inserted by Google Checkout based on the retailer's pre-arranged instructions. (That is, the retailer specifies ahead of time how much shipping and handling to charge per order, as well as whether or not to charge a sales tax).
- If Bob concurs with the total amount listed on the checkout page, he clicks a "pay now" button. This directs him to a payment pages, again hosted by Google Checkout. Bob will now be asked if he's already signed up for Google Checkout. If he has, Bob can simply enter his user name and password, and the rest of his personal information - address, phone number, and so on- are retrieved from Google's database and automatically entered onto the payment form.
- Next, Bob has to specify who he's going to pay for purchase. Google Checkout accepts payment via MasterCard, Visa, American Express, and Discover Card. So Bob enter enters his credit card number and expiration date (unless it's already stored with Google Checkout), then clicks the "pay" button to authorize payment.
- Bob's credit card information is now transmitted to Google Checkout. The service contacts the issuing bank for Bob's credit card, ensures that Bob has enough left on his credit line to cover the purchase, and charges the purchase.
- At this point, several things start to happen. First Bob is notified by Google Checkout that his purchase had been completed, in the form of a confirmation web page. Second, the retailer is notified by Google Checkout of the purchase, via an email message that includes information about what was purchased, as well as Bob's shipping information. Third, an electronic transfer of funds is initiated from Bob's credit card company to Google Checkout; the funds don't arrive immediately, but the transfer process is started. Note what doesn't happen at this point: The retailer does not receive specifics about how Bob paid. Bob's credit card information is retained by Google Checkout, but not transmitted to the retailer. This keeps Bob's financial information secure, and helps to protect Bob's credit card from theft.
- Once notified of the purchase, the retailer puts the purchase into process, so that item can be pull from inventory, packed, and sent to the designated shipping carrier. Depending on the retailer, this might happen immediately, or it may take several days to pack and ship the item. Note that the inventorying, packing, and shipping of the item are all handled by the retailer, not Google Checkout.
- For its part, Google Checkout now waits for the funds to be transferred from Bob's credit card account to its bank account. This might take a few minutes or it might take a few days; two days is the norm. Once the funds are transferred from the credit card company, Google Checkout initiates an electronic transfer of those funds to the retailer's bank account- minus any fees charged, or course. Note that the retailer ships out the purchase before it physically receives the funds for that purchase. That's because the retailer trusts Google Checkout to transfer the fund owed; since the actual payment has been made (by Bob to the online payment service), the retailer knows the funds are in the system.