Yahoo and eBay's PayPal have teamed up to attach a special icon to online merchants that advertise with Yahoo and offer PayPal's Express Checkout transaction processing.

The move seems intended to offer a joint defence against Google's Checkout payment processing service - now available in the UK - which grants special incentives to merchants that are also Google advertisers.

The blue shopping cart icons have already started appearing along with qualifying Yahoo search ads.

The pact is part of the broader partnership Yahoo and eBay struck last May, before Google formally announced its Checkout service.

Back then, the vendors agreed to make PayPal the exclusive third-party provider of Yahoo's online wallet, where users can store credit card, shipping and billing information for online shopping.

Yahoo also pledged at the time to heavily promote PayPal across its network and among its merchants and advertisers, but provided few details.

The deal will yield "a streamlined purchase process" for PayPal customers and boost the value of Yahoo's new search ad platform, the companies said.

As part of the launch, Yahoo and PayPal are serving up special offers for merchants, such as free PayPal processing until 31 December 2007 and a $100 credit for Yahoo search ads.

The Yahoo PayPal Checkout Program is free to join in the US.

More information is available in a website devoted to the programme.