Essentially, the way Google Checkout can afford to be cheaper than PayPal is by relying on their much-vaunted algorithms to take as many human beings out of the loop as possible. That's why there's almost no way to talk to a human being in AdSense, AdWords or Checkout: human beings are slow and expensive.

However, algorithms are not foolproof, and in the case of Checkout the desire to never have merchants talking to real people means that when the algorithm gets it wrong, these merchants have nobody to talk to, no phone number to reach, nothing. It seems pretty evil, and unless Google want to raise their rates on Checkout to match PayPal, it seems pretty unavoidable.

This is just another case of You Get What You Pay For, except in this case nobody thought Google would have a shitty product.