The Internet search giant Google is now offering merchants free usage of its online payment service at it squares off against eBay's biggest market PayPal.

Google had introduced Checkout in June with offers such as free ad credits for merchants. During November it offered discounts to customers, $10 off $30 on purchases. With the recent idea it will allow the merchants pay a variety of fees to use the service. PayPal normally charges 2.9% plus 30 cents per transaction on sales up $3, 000 per month. However Google's fee is 2% of the sale plus 20 cents, less if the merchant is a Google advertiser.

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