EBay Inc.’s payment unit, which includes PayPal Inc. and Bill Me Later, continues to gain momentum as it expands its offerings into mobile and contactless payments.
Indeed, as mobile payments simply involves another screen or device in a consumer’s shopping experience, the unit’s products and services will play a part, John Donahoe, eBay president and CEO, told analysts Oct. 20 during a conference call to discuss third-quarter earnings.
Many consumers now “start some of their shopping online and finish on a mobile-phone device, and vice versa,” Donahoe said. “The power of mobile is partly the application, but it also brings eBay’s listings and PayPal’s payments capabilities to consumers, regardless of where they are.”
Moreover, including a mobile-payment option increases buyer engagement and increases buyer frequency, he added.
PayPal continues to develop mobile-payments programs, Donahoe said, noting mobile third-party verification via PayPal will exceed $500 million by yearend.
The payment service’s newest mobile application, which the company launched earlier this month, enables consumer to deposit checks into their PayPal account using images captured with the camera on their Apple Inc. iPhone (see story).
PayPal has, in fact, become a formidable player in the payments market, observers say.
“PayPal has managed to build an electronic-wallet service that protects consumer data from merchants, which makes it easy to shop online,” Gwenn Bézard, a research director at Boston-based Aite Group LLC, tells PaymentsSource. “The business is now global, which is driven by the overall growth of e-commerce instead of just eBay’s business. Many merchants now accept PayPal payments as much as they accept Visa and MasterCard payments.”
However, such other companies as Google Inc. and MasterCard Worldwide are beginning to develop services to compete with PayPal, Bézard says. MasterCard, for example, in August announced a partnership with a Belgium-based payment company in hopes of improving cross-border online shopping (see story).
But to edge out PayPal, MasterCard and others would “have to provide a better checkout experience, and the industry is still not seeing any signs of that,” Bézard contends.
Regarding contactless payments, PayPal and Bling Nation Ltd. have been working together to enable PayPal’s 2,000 employees at its Palo Alto, Calif., headquarters to access their PayPal accounts using contactless stickers and special BlingBox terminals as part of a beta test (see story).
PayPal also is one step closer to enabling consumers to pay using PayPal at the point of sale through a recent Bling partnership with VeriFone System Inc. (see story).
“It is only a matter of time before we start seeing a PayPal-acceptance sticker on the windows of many brick-and-mortar merchants,” Peter Quadagno, president and CEO of Quadagno & Associates, a West Chester, Pa.-based consultancy, tells PaymentsSource. “PayPal is a payment company and is expanding beyond eBay transactions.”
For the third quarter ended Sept. 30, PayPal reported net revenue of $838 million, up 21.8% from $688 during the same period last year. The company brought its active account total to 90.5 million, a 16% increase from 78 million a year earlier.
PayPal’s net total payments volume increased 40.4%, to $13.9 billion from $9.9 billion, with Bill Me Later increasing its payments volume by 53.8%, to $306 million from $199 million.