EBay Inc.’s PayPal Inc. unit during the first quarter March 31 continued to expand its global foot print while its other payment unit, Bill Me Later, became a more mainstream payment method in the U.S. with 42% growth to $324 million from $228 in total payments volume.
“PayPal had another great quarter with strong revenue, active account and merchant services growth,” eBay president and CEO John Donahoe told analysts during an April 27 conference call discussing the company’s earnings.
In fact, PayPal was “just shy of its first $1 billion quarter and now represents 39% of total eBay revenue,” Bob Swan, eBay senior vice president of finance and chief financial officer, said during the call.
Moreover, “PayPal’s merchant services business now accounts for almost two-thirds of global total purchase volume and continues to gain share and expand its presence on websites around world,” Donahoe explained.
PayPal in March partnered with Singapore Airlines Ltd. enabling PayPal users in Singapore to draw from the balance in their account to pay for bookings on Singaporeair.com. Consumers also pay using the bank account, credit card or debit card linked to their PayPal account (
United Kingdom-based consumers also now pay for pizza orders online via their PayPal account through a deal between PayPal and Domino’s Pizza Group Ltd. UK (
PayPal during the first quarter also made it easier for consumers in Toronto to redeem airline miles for cash. Members of Points.com, a subsidiary of Toronto-based loyalty rewards management company Points International Ltd., may now redeem specific airline miles for funds they can deposit into their PayPal account (
Bill Me Later also began to “hit its stride during the first quarter,” Donahoe said.
“The payment option is now widely available in the PayPal wallet with integration across all of PayPal’s standard and express checkout platforms in the United States meaning that anywhere PayPal is offering in the U.S., Bill Me Later will be an option for qualified buyers when choosing PayPal at checkout,” he explained to analysts.
PayPal also is delivering strong mobile payments volume and should triple its mobile total purchase volume from $750 million last year to more than $2 billion at the end of 2011, Donahoe said.
Many merchants are offering consumers the option to make purchases using their mobile phones through PayPal Mobile Express Checkout, he added.
Mobile Express Checkout enables consumers to pay for purchases via their mobile phones and offers the same payment option and experience as the online version of PayPal.
PayPal also plans to continue developing its existing mobile-wallet technology and extend access to more customers (
“Mobile payments is definitely fueling PayPal’s growth especially because the company opened up its platform to external developers,” Julie Conroy McNelley, a senior risk and fraud analyst at Boston-based Aite Group LLC, tells PaymentsSource.
Allowing developers all over the globe to code on the company’s behalf has provided the company with a “huge impetus and can exponentially help the business grow,” she adds.
PayPal also has made both its mobile and online purchase experience very easy for consumers by only implementing a “one-click option” during check out, McNelly says. By reducing the number of clicks, the company has made is more likely for consumers to finish their transactions, she notes.
Additionally, with PayPal expanding globally and into the physical world, the company will most likely be a formidable presence for some time to come, McNelly contends.
As a company, eBay reported net revenue of $2.5 billion for the first quarter, up 13.6% from $2.2 billion a year earlier. The company generated net income of $476 million, up 19.6% from $398 million (
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