In a move that could be viewed as an early holiday gift for online merchants and a heaping lump of coal for eBay, Google Wednesday announced that it will process payments for free through Google Checkout, its rival service to PayPal, until the end of the year.

The regular fees for Google Checkout vary. If you’re a merchant participating in the company’s lucrative AdWords program, you may process up $10 in payments for free every dollar they spend on AdWords. Non-AdWord merchant, or those who exceed the limit, pay 20 cents per transaction plus 2% of the payment being processed.

PayPal’s fees start at 2.9% plus 30 cents per transaction.

According to reports, rumors of Google’s announcement had been floating around for at least a week. Notably, PayPal, owned by eBay, announced on Monday a holiday incentive program of its own aimed at consumers. “Millions of PayPal customers will be eligible to receive cash rebate offers up to $20 when paying with PayPal on qualifying merchant Web sites in North America … . Additionally, consumers will find free shipping from some of the Web’s most popular brand names when they pay with PayPal this holiday season,” according to a release from PayPal.

InfoWorld Tech Watch