Google planning PayPal rival

Financial analysts say Google is planning an e-wallet service that could eventually compete with eBay's payment service PayPal. Google has not confirmed the development.

The rumor is a first sign of Google's expected expansion of revenue sources to capitalize on its advertising customer base and search-engine traffic. What form that expansion will take has been a hotly debated subject for the company whose stock valuation momentarily made it the world's biggest media company on June 7, 2005. Even Microsoft has been mentioned as a possible future competitor.

Ebay's stock valuation dipped more than 2% on the news. Paypal currently accounts for one-fifth of the company's revenues. But one business analyst saw potential benefit for Paypal, depending on exactly how the "Google Wallet" takes shape. The uncertainty underlined the lack of substantive information behind the rumor.

According to the New York Times, the CEO of a major online merchant, who spoke on the condition of anonymity, was approached by Google to take part in this service. Steve Langdon, a Google spokesperson, declined to comment.

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