Google closes Checkout, pushing thousands of merchants into Braintree's arms

By Sarah Lacy , written on May 20, 2013

From The News Desk

At a simple level two things have kept Google from becoming Yahoo as it's aged. The first is continuing to innovate -- more or less. It may have missed social, but thanks to Android it's one of the most important companies in the smartphone world. This is to say nothing of wild, GIVE ME THAT NOW! investments in things like Google Fiber, Google Glass, and self-driving cars.

The second practice doesn't get as much attention, but it is equally important: The discipline to shut things down to focus on where the market is going. Google created Checkout as a competitor to PayPal, and while thousands of merchants use it, it never became a market leader. So Google has just announced it is going to shut down Google Checkout to focus on where the market is going -- mobile. Google will focus development on Google Wallet instead, even as the division's leader leaves the company and plans for a physical Google Wallet card have been put on hold.

This means customers without their own way to process payments in-house will need a new solution come November, and Google has partnered with Braintree, Shopify, and Freshbooks to offer discounted migration programs. When reached by phone, Braintree's CEO Bill Ready wouldn't tell us how many potential new customers this represents, but he says "it's meaningful," and could represent "many, many thousands" of new customers.

While Google may have tired of competing with PayPal's legacy online payment service, startups like Braintree and Stripe have not. And, as we've written at length, developers are hungry for newer, more modern options.

The deal also highlights the bizarre "co-optation" that goes on in the tech world. Google may be bored with the battle against PayPal, but it's focusing efforts on Google Wallet -- which competes directly with Braintree's Venmo Touch digital wallet. Both focus on making mobile commerce payments as frictionless as possible.

When I asked Ready about the irony of Google giving it the legacy checkout business in exchange for fighting harder on mobile, he stressed the two things most startups say when a huge giant gets in their space: It's not a zero sum game, and it's a big validation that Braintree's market thesis around mobile payments was correct. "We're happy to see the market moving in the direction we've envisioned," Ready says.