The Bank of PayPal

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EBay, which calls Google's year-old service unproven, has given no sign it plans to invite Checkout to the party. That point was stressed anew this week when Google tried to throw a "Let Freedom Ring" protest party in Boston during the eBay convention, hoping to rally eBay sellers behind Checkout. EBay responded with its own preemptive protest: The auctioneer pulled all its ads from Google's U.S. search results in retaliation for such behavior by a purported partner in other arenas.

Google canceled the party. In a post on the blog of Google's Checkout Team, Tom Oliveri wrote, "After speaking with officials at eBay, we at Google agreed that it was better for us not to feature this event during the eBay Live conference."

Security Drive

EBay does accept major credit and debit cards on its shopping sites—but only through PayPal. In an effort to avoid the transaction fees charged by card companies, however, eBay encourages customers to deposit money directly into PayPal accounts. As an incentive, it offers higher interest rates on PayPal accounts than those offered by the banks from which the debit cards draw.

To compete with plastic, PayPal is also taking security steps above and beyond those taken by many banks. EBay is launching a program with VeriSign (VRSN) to sell $5 wireless tags that display a new security code every 30 seconds. Users will punch in the code during a purchase in addition to their regular passwords. However, VeriSign is hoping to interest banks in this security-key service as well.

The new security measures announced June 14 included an alert service through which PayPal will notify an eBay seller if a buyer is risky. For example, PayPal would flag a buyer who has regularly purchased items and then stopped payment—perhaps claiming a problem with the item, then keeping it without paying.

Welcome Web Site Tweaks

EBay's top executives also spent much of their speeches discussing plans to reinvigorate growth on eBay's core shopping sites. Chief Executive Meg Whitman spoke about the company's efforts to combine community and commerce, something she calls "social commerce," to increase purchases on eBay auctions. The company has enhanced ways for users to set up detailed profiles, similar to blogs, to discuss their favorite shopping items. The goal is to become more of a bazaar or mall, a place where people go to hang out and browse, as well as shop for specific items. In this way, eBay hopes to grab more casual shoppers.

EBay also announced a site redesign. In the coming months, users will see photos in response to search results for a specific item or category. A click on an item would bring up a box on the side of the screen detailing when the auction ends, the current bid, the price to purchase it outright, shipping costs, and information about the seller.

Sellers have long complained that eBay's site needed a revamp to make search results more relevant and display them more attractively. "Everyone has been picking on eBay about the search on its site," says Scot Wingo, president and CEO of ChannelAdvisor, a provider of software and other services for Internet retailers.

Whether buyers will respond by spending more on eBay remains to be seen. But if they do spend more on eBay's shopping sites, they will spend more using PayPal. That would give eBay two reasons to celebrate.

Holahan is a writer for BusinessWeek.com in New York.