Wednesday, March 22, 2006

The latest on PayPal's plans - from Silicon.com

Where next for PayPal?


By Dan Ilett

Published: Tuesday 21 March 2006

Online payments company PayPal is looking to extend its reach beyond its online shopping beginnings.

The company is growing fast - its set to add 600 jobs at its San Jose operations centre this year - and recently hit 100 million PayPal accounts worldwide.

In the UK alone, PayPal has 10 million user accounts. The company estimates 10 per cent of the UK population are now its customers and that one in three of the country's 15 million online shoppers uses the service.

Our ambition is to become the preferred online payment method. But people also want access to their funds and will want to go to an ATM and pull money out. So there is going to be more presence offline over time.


-- Geoff Iddison, European CEO, PayPal

PayPal was set up in the US in December 1998 and acquired by eBay in 2002.

Paypal.co.uk handled payments worth £350m in the fourth quarter of 2004 but that was at a time when it only had around 80 million accounts around the world.

But while the company's online success largely relies on the support it received from parent company eBay, PayPal is looking to extend beyond this.

PayPal has recently partnered with Betfair, the online bookie for payments. It also works closely with Dell, iTunes and, being part of the same business family, eBay and Skype.

And it also wants to change from being exclusively an online service to something you could use on the move - or on the high street.

PayPal's European CEO, Geoff Iddison, told silicon.com: "Our ambition is to become the preferred online payment method. But people also want access to their funds and will want to go to an ATM and pull money out. So there is going to be more presence offline over time.

"I see PayPal partnering in that area and I think you'll see some of our ambitions in that area coming out this year in the UK, whether it's mobile payment or offline transacting. Our biggest push at the moment is in the merchant space - getting it accepted by merchants other than eBay."

In the US, PayPal has already launched its own credit card, and Iddison hinted to silicon.com that something similar could be heading for the UK.

The card is not linked to PayPal's online accounts but is instead a separate product which piggybacks on the company's brand.

Iddison said: "The plan is to research the use of credit and debit cards in other countries.

He added: "The one from the US is MasterCard only. Any credit card we would issue would be branded MasterCard or Visa so there's no direct competition with these companies. We have a very close relationship with them, and we're one of their top merchants."

Analyst Gartner recently argued that banks and vendors should sell PayPal payments to their customers, instead of trying to compete with the online company. It said PayPal can beat credit card pricing and merchants should ditch 'outdated' payment methods.

But Gartner research director Avivah Litan told silicon.com: "I think PayPal represents one of the only viable and real alternatives retailers have to bank card payments. The problem is that the PayPal system relies on funding from bank checking or credit accounts.

"Once [PayPal] starts to represent a real threat to the banks in the offline world, banks and card companies can raise their rates."

Iddison believes PayPal will continue to lower its prices as its customer base grows: "We feel like we've potential to bring those prices down further. The scale of the 100 million customers has enabled us to reduce the costs. You are certainly going to see some of that in the near future. The micro-payments market is the one we're focusing on."

And he points to contactless payment as another market to keep an eye on.

He said: "There's so much going on in that. It's a fascinating area. This whole payments side is a big booming area. We're very conscious of the technical changes offline, so when does PayPal start becoming an online business and offline?"

1 comment:

Smoke said...

Drugs are just bad, you should try to use Herbal Alternatives as a temporary replacement to loose the dependance!