Recurring problems with Google Checkout

An important feature in Google Checkout has now been unavailable for almost a month, and some merchants are getting fed up with Google's automated approach to their concerns.

Google's ability to handle recurring payments, such as monthly subscriptions to a service that are automatically billed once a month, has been impaired since around the middle of August with little notice by the outside world. A customer first reported the issue in a Google Checkout forum in August, and others, such as Katie Braband, sales director at storage company Datto, are still unable to rely on Google to process anything other than one-time payments.

Braband went into Datto's offices on September 2 to a nightmare for any small business owner: the monthly revenue from subscriptions to Datto's off-site data backup services did not arrive as scheduled in its Google Checkout merchant account. Making matters worse, there was no way to contact a live human being at Google directly; Datto was directed to an online forum and support page where they received this response: "Our engineering team is working to resolve this as quickly as possible, though I'm not able to provide a specific timeline at the moment."

Google confirmed there are still problems with Google Checkout on Wednesday but provided no time frame for a fix. "We're currently looking into some service disruptions to Google-handled recurring payments. Merchant-handled recurring payments are functioning normally," the company said in a statement. Merchant-handled payments are when the merchant submits a request for payment on the day of the recurring period, a burden that services such as recurring payments processing are designed to avoid.

Google Checkout has been around since 2006. Designed in part as a competitor to PayPal and Bill Me Later--the far-more common online payment processors--Google Checkout offer Internet merchants the ability to accept payments online without having to invest time and money into building and maintaining their own payment processing system, in exchange for a cut of each transaction.

That's a familiar strategy at Google, which offers budding application developers hosting resources at Google App Engine and other businesses the ability to bypass more expensive office productivity software with Google Apps. But while Google is quick to respond when problems knock services like Gmail or Google App Engine offline, the delay in responding to problems with Google Checkout has cost it at least one customer.

Datto's problems with Google began when Google surprisingly placed a 15 percent reserve on its account following a review of Datto's finances, which the company insists were in order and evidence of a healthy balance sheet. Payment processors will often hold a portion of all money slated to wind up with the merchant in cases where merchants have a higher-than-normal number of chargebacks or appear to be going through a rough patch as a hedge.

For several days, Datto was unable to reach anyone at Google to confirm that its financial statements had been received as part of that review, which made the company worried because the request for its finances came with a warning that all payments would be stopped if Google didn't receive a response within five business days. Google doesn't offer phone support for Google Checkout; instead it maintains a Web site called the Merchant Help Center for customers to get support and lodge complaints.

Confirmation eventually arrived with the reassurance that the account was working properly and everything was in order, but six days later Google told Datto that it would be holding 15 percent of all payments processed through Google Checkout "based on a recent review of your business," and with no further explanation. At this point, Datto decided to build its own payment processing system and move off Google Checkout.

However, before the new system could be completed the company discovered the issues with recurring payments. "We received no notification whatsoever that the recurring payment system was broken and now we have no guidance as to when it will be fixed," Braband wrote in an e-mail. "In addition to having 15 percent of all Google Checkout disbursements held in a reserve account (completely inaccessible to us) for 90-180 days, we now have no way of collecting our monthly recurring payments."

Google declined to comment on the specific circumstances involving Datto, saying that it does not comment on individual accounts.

In an interview, Braband said Datto was lucky that it had already made so much progress toward developing its own payment processing system but the outage caused problems with customers who thought their data was not being backed up when the payments went awry, and has forced them to re-evaluate their impression of Google in general.

"As a young technology company we always admired Google. Their many free tools and applications are amazing and the support that comes with them is great too. It's disappointing to all of us at Datto Inc. that these fixable occurrences regarding Google's payment processing has tainted our admiration of the people who changed the web, and that Google has chosen to provide no support to the many businesses paying to use Google Checkout," Braband wrote in an e-mail.

And that could be a real problem for Google as it attempts to build paid services around products like Google Apps. Even small businesses are accustomed to developing relationships with their suppliers that can help smooth over the inevitable problems that occur in any business relationship.

Nieman Journalism Lab reported Wednesday that Google has offered its services with micropayments as a possible solution to the woes of the newspaper industry, allowing them to charge news consumers small amounts for individual stories or recurring subscriptions through Google Checkout. Before that happens, some serious problems with Google Checkout and customer support will need to be addressed.