Google CEO Eric Schmidt has confirmed that the company is developing an electronic payments product but has denied that the service will compete directly with eBay's online payments system, PayPal.
Schmidt told reporters that the firm does not intend to launch a "person-to person stored value payments system".
EBay shares fell three per cent earlier this week following speculation that Google was gearing up to launch a rival to its PayPal service. The prospect of Google introducing classified advertising as part of the payments roll-out also dented eBay. In contrast shares in Google rose 2.7%.
News that the giant search firm filed documents to establish a new corporation in California called the Google Payments Corporation in April this year added to the speculation.
Brian Crozier VP, business development at Canadian e-debits processor UseMyBank Services, told Finextra that he had been approached by analysts regarding the firm's G Pay billing company branding - which was thought to be a name that Google may have wanted to use.
Schmidt did not disclose precise details of a potential payments product but did say that Google is working on a system that is a "natural evolution" of Google's existing online search, advertising and price comparison services. One possibility would be for Google to introduce an online debiting system - similar to the UseMyBank system - which doesn't require users to have a credit card.
Some analysts believe the payment product will initially be tied to Google's shopping comparison service, Froogle, which could become the basis of a future e-commerce system.