I could go on for pages and pages about this topic. Google Checkout isn't bad, but as a buyer I've had issues with it. A friend of mine bought a Wii from a site using Google Checkout. The money was charged and the Wii never came. When he went to get the money back, the website was gone. When he went to Google, they explained that they weren't responsible. With something like PayPal, on the other hand, users have more luck if a situation like this were to occur. There's always insurance options through PayPal and merchants have to have a PayPal account to use it, so they can't just disappear if something goes wrong.
As a merchant, I suggest PayPal over Google Checkout, but if you really want to enter the ecommerce space with a bang, then you should really bite the bullet and get shopping cart software. There's a huge difference between a simple "buy now" button that directs users to another site to make the purchase, vs. a full ecommerce suite that allows users to purchase on your site thus encouraging repeat traffic. If money is the issue, you should consider the true costs of Google Checkout and PayPal. You have to pay them a portion of your sales (usually 3%), which can really add up every month. If you were to use a shopping cart like 3D Cart or X-Cart, your monthly payment would be low and consistent, which helps your budget and bottom line.
Also, an ecommerce shopping cart gives you so many more features than Google Checkout or PayPal will and (as mentioned above) the costs are almost the same. With the ecommerce cart software, you can make a very robust selling machine that allows you to provide users with coupons, gift certificates, wish lists, customer accounts, saved carts, automated emails for each order, marketing emails, and on and on. As a merchant, a shopping cart gives you the ability to integrate with multiple payment gateways that include Google Checkout and PayPal, integrate with various shipping carriers like DHL, USPS, FedEx, etc., set custom tax tables - again, the list goes on.
Clearly I could talk for hours about this stuff. If you're not ready to get a shopping cart, then use PayPal over Google Checkout. When you're ready to get a shopping cart, consider using this shopping cart comparison tool to find the best one.
Nick @ 7up
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