Google Inc. may not be trying to get out of handling online payments after all.

The Mountain View, Calif., company has introduced an online tool designed to help small e-commerce sites use Google's Checkout service to handle payments.

The tool, announced Friday, shows that Google is continuing to work on a service that some analysts had speculated it wanted to shutter.

Checkout has long offered subsidized processing fees to merchants that also used its AdWords, but in March it announced a significant price hike that eliminated the subsidies and made its pricing almost identical to that of its rivals, eBay Inc.'s PayPal Inc. and Inc.

The higher fees, which took effect in May, outraged many merchants and raised questions about Google's commitment to the Checkout service.

Some observers said at the time that the subsidies had become too expensive to maintain during a recession that has trimmed advertising and that Google might be planning to quit the processing market. Numerous merchants that were Checkout users vented on bulletin boards and other online forums that they planned to shift to other providers, notably PayPal, as soon as the price hike took effect.

The new tool is "definitely an indication that they're not entirely giving up," said Bruce Cundiff, a research analyst at Javelin Strategy and Research.

Google introduced Checkout in June 2006, but executives have never disclosed details of its market adoption. eBay has said its payment services, PayPal and Bill Me Later, have 62.6 million active registered accounts.

After announcing the higher fees, Google never directly addressed questions regarding its plans for Checkout and, until last week, had said almost nothing at all about the service.

"Checkout continues to serve as a product that helps retailers increase sales and protect themselves from fraud," Google spokeswoman Rachel Nearnberg wrote Monday in an e-mail exchange. "We have millions of buyers in more than 140 countries and hundreds of thousands of merchants in the U.S. and the U.K."

Google's tool is designed for ease of use, Nearnberg said, and can be linked with merchants' inventory records stored in Google Docs spreadsheets, formatted according to a company template and including images, product descriptions and availability, along with the price.

The seller can embed the tool on a Google-hosted site or on a blog or other Web site. Checkout stores consumers' payment card account data and makes it easy for people to complete purchases online.

Google also introduced a "buy now" feature for the Checkout service at the beginning of July, designed for sellers of digital goods, such as downloadable songs or games. This service appears to compete with Facebook Inc.'s fledgling payment system, which involves converting currency to credits that can be used on its Web site.

Anjali Vaidya, an associate product marketing manager for Checkout, wrote in the blog post announcing the newest tool that "selling online has never been easier — no complicated coding or technical tasks are required."

Cundiff said Google's efforts appear to be aimed at e-commerce novices but will probably face stiff competition from PayPal.

"It looks like they're going after smaller and smaller merchants," he said.

He questioned why a merchant would use it. "I don't see any associated promotions, price breaks or otherwise," he said. "We're going to enable you to sell. That's the whole message."

Andrew Schmidt, a research director in the global payments practice at TowerGroup, an independent research unit of MasterCard Inc., said that Google, notwithstanding its search strength, is at a disadvantage in merchant processing because it lacks a merchant operation.

"PayPal was a natural extension of eBay's auction service. Amazon Checkout was a natural extension of Amazon's existing business," he said.

Google could be testing the market to see whether its name alone is powerful enough to attract merchants' business, Schmidt said. "They could be using it as an experiment to collect information."

Or the company may be content to bide its time in the fast-changing Internet business, he said. "As long as it pays for itself or comes close to paying for itself, they might as well leave it out there."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.