Vincent Poulbere - Ovum
Will PayPal revive mobile payments?
eBay's online payment unit PayPal has started a mobile payment service, offering person-to-person payments and also mobile shopping services enabling users to order and pay for goods from their mobile. Customers need to be registered PayPal users to pay from their mobile. Payments are made by sending short text messages containing the payment instructions. According to a recent press release, PayPal has some 100m accounts in 55 countries, and in 2005 it processed more than $27b in total payments, and exceeded $1bn in revenues.
Comment:PayPal is the most successful online payment service, so its move into the mobile area has long been awaited by many players. This PayPal initiative is another example of eBay expanding its Internet activities into the mobile area. For example, this comes after the recent announcements of mobile Skype services.
PayPal's new service comes after a long series of failed initiatives in the m-commerce area. Mobile operators, financial companies, handset manufacturers and independent service providers have attempted to define and implement mobile payment systems. But so far, these initiatives have failed to deploy on large scales, and in best cases, they are still running at a country level, like Paybox in Austria.
So is there a chance that PayPal's initiative will succeed where so many have failed? Looking at the service itself, PayPal's m-payment capability, based on the use of text messages and short codes to transfer money and make purchases, is similar to other services, such as Contopronto or TextPayMe. So nothing new here, though the service is still in beta version and may evolve soon.
But PayPal has two huge advantages: users already have a registered account, and just need to sign in for the mobile payment capability, and also it already has merchants accepting PayPal transactions. Other initiatives from independent service providers have struggled to acquire both potential users and merchants for a standalone mobile payment service. But that won't be enough for PayPal. It will have to educate its users about how to use the mobile capabilities, and merchants will have to publicise the mobile PayPal payment, called 'Text to Buy' (on billboards, in magazines, etc). This will be challenging for PayPal and it will probably take time, but it has the opportunity to become a major player in the mobile payment space. Synergies with eBay's Internet activities and with other mobile services that will be introduced by the company will certainly help it to get there.
This article is an extract taken from Ovum's EuroView Daily Comment service. Providing our expert's views and opinion of the important news and events in European IT & Telecoms, this daily email bulletin is a component of Ovum's EuroView advisory service.