BEIJING, June 20 -- Online search-engine leader Google Inc. plans to introduce an electronic payment system later this year that could help it diversify revenue and may heighten competition with eBay Inc.'s PayPal unit.

    Exact details of the search company's planned service are not known, the report said, but quoted people familiar with the matter as saying it could have similarities with PayPal, which allows consumers to pay for purchases on Web sites by funding electronic-payment accounts from their credit cards or checking accounts.

    San Jose-based EBay bought PayPal for $1.3 billion in 2002. The payment service makes money by collecting a fee from the transactions that it helps complete. The electronic accounts are funded by credit cards or banking account transfers.

    eBay's PayPal service is already on the path to generate nearly a billion dollars in revenue this year.

    Mountain View-based Google has codenamed its future payment service Google Wallet, and it will possibly get a major new chunk of extra revenue money, coming both from the saved fees Google is now paying to banks and delivery services to distribute its payments to advertisers and publishers as well as from the commission fees it will leverage from individual people transactions.

    Expanding into online payments might make Google less dependent on advertising, which accounted for nearly all of its first-quarter revenue of $1.26 billion. The merchants who run auctions on EBay are major buyers of Google's ads, which appear alongside search results.

    A Google spokesman declined to comment on the report.

(Agencies)