PayPal CEO: Ready To Compete With Any Google Offering
By Desiree J. Hanford, Of DOW JONES NEWSWIRES
LAS VEGAS -(Dow Jones)- EBay Inc.'s (EBAY) online payment service PayPal is accustomed to having competition, and it will "compete rigorously" if Google Inc. (GOOG) launches a similar product, PayPal President Jeff Jordan said.
PayPal's "competitive intelligence" has told the company that at some point Google will begin offering a service similar to that of PayPal, Jordan told Dow Jones Newswires in an interview Tuesday here during eBay Live, an annual gathering of buyers and sellers.
"We respect their entry and stand ready to compete," Jordan said, noting that PayPal has had plenty of competition from other companies since its inception.
PayPal had 105 million accounts as of March 31, the end of eBay's first quarter, a 47% increase from the number it had a year earlier. PayPal's total payment volume, or the total value of transactions during the quarter, was $8.8 billion, a 41% increase from from the year-earlier period.
There has been speculation for about a year that Google will launch a competitor to PayPal. That speculation heated up Friday when RBC Capital Markets analyst Jordan Rohan said in a research note that Google is set to launch a payment system known as "GBuy" on June 28. The system appears to be a direct competitor to PayPal's initiatives off the eBay site, Rohan said in the note.
Although "GBuy" is focused on consumer-to-merchant transactions, there's no reason why it couldn't be expanded at some point to include consumer-to-consumer transactions, said Rohan.
On a worldwide basis, PayPal charges sellers an average of 3.5% of a transaction price to use the service. Rohan doesn't expect Google to initially charge for "GBuy," but he estimates that the company will eventually charge 1.5% to 2% for the service.
EBay'sPayPal can be used by consumers paying merchants or by consumers paying other individuals. PayPal has been expanding its use off of eBay sites, and is accepted by computer maker Dell Inc. (DELL) on its site for payment.
PayPal has been in existence since December 1998 and has spent a considerable amount of money ensuring that buyers and sellers feel safe using the system and are protected from fraud, Jordan said. He reiterated that the company has never shared the financial information of buyers with sellers.
The online payment service is easy to set up and is less expensive than some other forms of electronic payment, Jordan said. Small- and mid-size businesses see a 14% increase in sales when they begin offering PayPal on their sites because the payment system brings instant credibility to their company, he said.
"What we do is operationally intensive," Jordan said. "We think we're pretty good at it and have a pretty strong lead."
PayPal's biggest challenge is executing on all the opportunities it has, both on eBay's sites and off of them, Jordan said.
Shares of eBay ended Tuesday's session at $30.51, up 1.3% for the day. The stock is trading near the low end of its 52-week range of $28.87-$47.86.
-By Desiree J. Hanford, Dow Jones Newswires; 312-750-4135; desiree.hanford@ dowjones.com
(END) Dow Jones Newswires 06-14-060925ET Copyright (c) 2006 Dow Jones & Company, Inc.