Technology: Online and mobile payments
Why it's one to watch: PayPal is building a versatile mobile wallet.
In the 1990s PayPal invented a way to let a new breed of small online merchants accept credit cards for the things they sold on eBay. One could argue that this was the first digital wallet.
Now, the unit of eBay Inc., of San Jose, Calif., is making its electronic wallet relevant in the burgeoning mobile payments world. It has a strong vision of supporting multiple technologies, whether that is for smart phones equipped with near-field communication technology, or older card-based technology. It is building a platform to accommodate nearly everything, including the ability to pay for things at the point of sale in the physical world.
"The [digital] world has expanded to everyone having connectivity at every moment through mobile devices and this is an opportunity to bring value through the PayPal wallet," Sam Shrauger, vice president of global product and design for PayPal says.
That means PayPal must go head-to-head with Google Inc. and other companies that have staked a claim in more structured models. One of the larger battles it faces is with clearXchange, a Wells Fargo/Bank of America /JP Morgan mobile payments venture that enables person-to-person payments directly from one bank account to another. PayPal is responding by extending an offer to its bank clients to execute payments directly between accounts, an upgrade of the traditional PayPal separate account model.
"A lot of what you will see out there is driven by companies with a particular technology they want consumers to use for payment purposes," Shrauger says.
Not so for PayPal, which plans to roll its wallet out in phases over the next two years. It will include such novel ideas as a dedicated magnetic stripe PayPal card, a five-day float during which time consumers can change payment options, and the ability to pay for things at stores with rewards or points stored automatically on the wallet. It is also introducing a comprehensive suite of geo-location services that will let consumer locate items at nearby stores, and let merchants push offers for merchandise out to consumers.
In 2011 PayPal expects to process more than $100 billion in payments, with $3.5 billion coming from mobile (up from $750 million a year earlier.) It has 100 million users.
"We are large participants in the payment system now, and generate large volume in credit and debit card networks and ACH," Shrauger says. "As the digital world is upon us there are very interesting ways for us to work with banks."
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