Google will today launch a system for UK shoppers to pay over the internet, pitting it against eBay-owned online payment system PayPal.

Shoppers will register their account and shipping details with Google Checkout, which they can use to pay for goods at any participating retailers.

It was thought Checkout would crush PayPal when it launched in the US last summer, but Paypal has continued to grow and now has more than 133 million users worldwide and more than 15 million in the UK.

Google says it has thousands of retailers and millions of buyers in the US.

PayPal contributed 24pc of eBay's $1.72bn revenues in the fourth quarter of 2006 by charging merchants fees of 1.4pc-3.4pc of the transaction amount plus 20p every time a shopper makes a purchase.

Google has been agressive with pricing, offering retailers free processing until the end of the year, after which they will charge them 1.5pc of the transaction plus 15p per transaction.

Telegraph.co.uk