During the just-completed holiday season, PayPal Inc. experienced a surge in consumers making purchases using its online payment service with their smartphones and other mobile devices, according to the San Jose, Calif.-based company.
Between Nov. 15 and Dec. 15, PayPal experienced a 300% increase in mobile payments compared with the same period in 2009, according a spokesperson for the eBay Inc. unit, who would not provide specific numbers. She attributes the rise to the increase in consumers owning smartphones.
During the final holiday shopping weekend last month that fell on Dec. 18 and 19, PayPal experienced a 279% increase in mobile purchases compared with the same period last year, the spokesperson says. On Thanksgiving Day, PayPal experienced a 297% increase in mobile-payment volume, and it had a 310% increase the next day, Black Friday.
The technology within the mobile-payments industry is “catching up and maturing, giving consumers an easier way to check out,” the spokesperson says.
For all of 2010, more than 5 million consumers used PayPal’s mobile applications, generating more than $700 million in total payment volume, up from $141 million the previous year, the spokesperson says.
PayPal last year launched Mobile Express Checkout for merchants looking for a simpler checkout service for their mobile sites, the spokesperson says. Mobile Express Checkout enables consumers to purchase goods using their smartphones similar to how they make purchases online.
Creating a mobile-checkout option is important because many consumers, especially younger ones, view mobile shopping as an extension of online shopping, Scott Strumello, an analyst for New York-based Auriemma Consulting Group, tells PaymentsSource. These consumers “do not differentiate between mobile and the Internet,” he adds.
Moreover, many consumers respect PayPal and feel they can trust sending funds or making purchases using the company’s checkout options, both online and on a mobile phone, Strumello says. “PayPal was one of the first big players to offer mobile payments and has not really done anything to breech the trust between the company and its consumers,” he notes.
Overall, consumers seem more willing to try new mobile technologies, the PayPal spokesperson says. “Mobile phones are definitely changing the way people shop. Consumers now have the flexibility to shop from home and avoid crowds or a way to compare prices in-store,” she says.
Several applications enable consumers to use their mobile phones to scan barcodes and check prices to ensure they are receiving the best deal, the spokesperson says. Consumers also may receive special discounts and rewards from merchants offering a mobile-purchase option based on how frequently they shop or spend time in a store.
“PayPal Local on PayPal’s Apple Inc. iPhone application enables consumers to search for local stores accepting PayPal and offering deals and discounts,” she adds.
PayPal also offers applications for Research in Motion Ltd.’s Blackberry and Google Inc.’s Android phones. However, Mobile Express Checkout is available only on the iPhone and Android phones.
As consumers continue to use smartphones and become more comfortable shopping and paying with them, “we anticipate our mobile-payment volume will continue to increase substantially by the end of 2011,” the spokesperson says.
Despite its success over the holiday season, it remains to be seen whether PayPal will end up ruling the mobile-payments market, Strumello contends.
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