I’ve been meaning to do this for a while, it’s a comparison between Google Wallet and Paypal as a payment processor option on a website to compare what happened to conversion rates when Google wallet was replaced with Paypal.

Although I’ve waited far too long to post this, and subsequently Google have announced they’re dropping Google Wallet, I thought it was still an interesting case study, because we are all online to make money, and if something as simple as the payment method can have a drastic effect on conversions then it’s well worth knowing about.

So despite Google announcing the end of their Wallet I’ll still post the results since they are very interesting.

The website (which I won’t name) remained the same, no changes to design, layout, or anything else, it was just the change to Paypal.

Google Wallet was installed on the site in December 2012 and ran through until April 2013, a total of 127 days. During that time the site generated £2297 in revenue, but due to Googles weird way of handling payments (more on this later) there were £423 of refunds, leaving £1874.

So the site was earning at a rate of £14.75 per day.

Once Paypal was installed sales started to pick up immediately. In 30 days the site generated £1670 in revenue with no charge backs.

This works out to £55.66 per day.

That is clearly a dramatic upturn in revenue – £41 per day more, 3.77 times more than with Google Wallet. So why would this happen?

Both Google and Paypal are well known strong brands, but our belief and the reason we decided to change the payment processor, is that Paypal are a strong brand in online payments, while Google aren’t.

Of course Paypals strength in this niche means that many people will already have Paypal accounts, so it’s very easy for them to decide to buy, and to then checkout, while most people do not have a Google Wallet account and have to go through the annoying process of signing up first before they can buy.

This is undoubtedly enough to stop many people who are ready to buy from actually completing the purchase.

From the merchants point of view Paypal are also a much better option, simply because of Googles way of handling payments.

When a customer purchased via Google Wallet they received an email that they had to respond to, to confirm their purchase.

If the customer failed to respond (like if the email had gone into their junk folder for example), then Google automatically took the money back out of the Wallet account and refunded them.

This annoying repeated occurrence happened a week or 2 after the purchase, meaning that you’d have almost always either shipped the goods or performed the service, leaving you out of pocket if the buyer didn’t resend you the money.

In the case study above you can see that heading for 20% of receipts ended up being refunded, a way too high figure that is quite astonishing, while by comparison, albeit over a much shorter period of time, there were zero refunds via Paypal.

So in summary, while Google Wallet will be no more it is clearly very important to think about the payment processor you choose as part of your conversion rate optimisation, and although many businesses see Paypal as a bit of an amateurish way for a business to take payments, if you are selling to the public then it is possibly one of, if not the best option that you can choose.