PayPal 2 Google: We Can Throw TWICE As Much Money Down The Toilet!

One of the most god-awful stupid promotions I’ve ever seen was when Google started offering $10 off $30 or higher purchases made with Google Checkout at select stores. The savings were great for the consumer, but it inspired zero loyalty in anything, just a huge loss-leader that may turn out to have accomplished nothing.
Well, PayPal has decided it needs to throw away twice as much money as Google did! Between November 23 and December 15, purchases of $50 or more at participating retailers, including Dell, Sharper Image and Barnes & Noble, will earn a one-time $20 credit to their PayPal account. Google’s discount was good an unlimited amount of times, but it was only ten dollars and at less stores, so eBay’s PayPal unit stands to lose a hell of a lot more money.
I don’t understand it. I may not have an economics degree, but I can’t see what the benefit is in giving away free money. The retailers aren’t stupid, and know that any increased sales are due to the savings, and thus have no reason to be loyal to PayPal, and the customers don’t care, since they’re just looking for the latest bargain. Have both companies just gone off the deep end?(via Ben’s Bargains)
UPDATE: Jeez, Google has a response: $10 bonus for signing up for Google Checkout. Sign up before this Sunday, and get ten dollars off your first purchase (expires at the end of the year). Really, will this (a) be a great way to save ten bucks, or (b) drive billions of dollars into Google’s pockets and inspire customer loyalty? Oh, the first one? Really?(via SlickDeals)