The one-day meme that was: "Google is going to take out PayPal" is now waning since Eric Schmidt himself said that wasn't the case.
However, my guess is that Google's payment service is related to this factoid: (via Andy Beal): 51% of Adults Shop with Search Engines
Connecting Froogle to offline inventory is the next big move. Anything that connects Google's traffic to shopping comparison, and to merchants is gonna be huge. And Froogle, though slowly improving, has never had a day in the sun.
So it's not really EBay in the cross-hairs - it's Amazon.