Google Inc. has expanded its online payment service so that users can buy and sell everything from bicycle brakes to Beanie Babies through its Web site, posing an immediate challenge to eBay Inc.

Google added the payment service to its nascent Google Base classified listings Friday, an expected move that nonetheless sends shockwaves through the Internet industry.

EBay dominates e-commerce with its online marketplace and PayPal payment service. Analysts believe Google’s entry into both arenas could cause headaches for more established competitors.

“In our view, this is a clear shot across PayPal’s bow,” Ben Schachter, an analyst for UBS Securities, wrote in a research note Monday.

Currently, Google’s payment service, Google Accounts, is available from a limited number of sellers on Google Base. More are expected to be added over the next few months, the company said.

To use the service, users must register with Google Accounts and submit credit card information. To make a purchase, users must click on a “buy” button next to a product and then go through the checkout process, which includes an estimate of the shipping costs.

Google’s payment service is without fees or commissions.

The Mountain View company introduced Google Base, online at base.google.com, four months ago for users to post whatever they want online for free, whether it be an article of clothing, a DNA sequence or a job offer. Until the payment system was added Friday, all buying and selling of listed products had to be completed outside of Google’s Web site.

Posted: 03|1|06 at 10:26 am. Filed under: Auction News.