There are big differences between the two however and Google Checkout is limited in the number of currencies it supports and as a pure online system it only accepts payments in the UK and USA. Plus Google Checkout cannot be used to transfer funds.
Paypal on the other hand operates in multiple countries and currencies and allows easy transfer of funds through their system. Question has to be asked then if having a Google checkout account is really a serious competitor to Paypal or not.
Google checkout came into existence to become a direct competitor to Paypal who hold the prime position as the go to facility for accepting online payments.
Both Google checkout and Paypal are what are called a 3rd party payment processors, which means when you register with them you are given access to software that places different payment options on your website. When a customer clicks on the payment button they effectively are dealing with a 3rd party i.e. Paypal for example take over the purchase, accept the payment on your behalf and redirect the customer to a page that tells them what happens next. This might be a page where they can download a digital product or a page that simply informs them that the payment has been accepted and that the product will be shipped to them in the next few days.
For a merchant, Google Checkout or Paypal is a great way of handing off the responsibility of dealing with secure payments. This does of course come at a cost, both Paypal and Google Checkout charge for the service and Paypal insist that you have a business Paypal account for providing this service as opposed to a free personal Paypal account.
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After being in the technology industry for over 30 years, I now live in the South of France running several different businesses. Just sharing what I know and learn as I go along and hoping that it helps one or two people out.
