Google has finally launched Google Checkout, its much-anticipated payment service (also known as Google Wallet and Gbuy), intended to make online shopping more convenient for buyers as well as sellers, according to a report by CBS/AP. Essentially, Google would become the middleman, acting as a repository of buyers' billing and financial information as well as leading buyers to merchants that advertise via Google.

Consumers using Google Checkout would buy products and services from a host of participating merchants - identified by a green shopping cart symbol next to their ads - without entering their personal and financial information at each store (Google offers a tour of the process). Google Checkout is likely to challenge not only leading online payment system PayPal, owned by eBay (one of Google's largest advertisers) but also e-commerce giant Amazon.

For now, Google Checkout is offered only in the U.S. and accepts only credit cards for transactions but is considering other payment systems, such as electronic fund transfers from bank accounts, according to Salar Kamangar, vice-president of product management for Google.

Though big brands may prefer collecting their own checkout information so they have data for marketing efforts, smaller merchants are more likely to participate. Merchants wouldn't pay processing fees on sales for up 10 times their monthly AdWords advertising volume with Google. Google would thereafter charge them a fee equal to some 2 percent of the purchase amount, plus 20 cents per transaction.

Though integrated into AdWords, Google Checkout will not be used - at least for now - to track data about which keywords lead to purchases and use such information to modify AdWords auctions or bid prices or influence its new cost-per-action ad system, Kamangar told CNET.

The back-end of the system is what Google has been using to allow customers to pay for premium services on Google Earth, Google Video and Picasa, Kamangar said. Google Checkout could also be extended to mobile devices, but Google is not working on that now, according to Kamangar.