It's sort of built to compete with Paypal. It's just another alternative payment system. It's free to sue through the end of the year and in general it seems to help improve conversion rates. It's not really that special, though, and is just another payment option available to merchants.
I would say of course google will compete with paypal since it is almost the same service both companies offer. Okay paypal has been there for many years but then again, google is a huge company and they have alot of "fans" that will move right a way to googles services if they can get the same there then what they can with paypal.