Why the Smart Money is On PayPal
Of all of the titans of the Web industry right now, few have
put themselves in as enviable a position as PayPal.
Apple has skyrocketing stock values and two of the hottestselling
products ever made. Google and Facebook have
more website visitors than most countries have citizens —
not to mention all of their personal data. And Amazon has
set the bar so high in e-commerce that it controls much of
the movement throughout the industry.
The same was true for e-commerce pioneer eBay just a
few years back, but its auction marketplace has been gradually
fading into the background of the company’s operations.
Enter PayPal, the online payments service purchased
by eBay in 2002 — and which is rapidly becoming its most
lucrative property. In fact, each of the aforementioned companies
are either forging new relationships with PayPal or
sweating the possibility of competing with it in the future.
In the third quarter of 2010, PayPal accounted for
37 percent of eBay’s overall revenue, compared with 23 percent
five years ago. PayPal’s revenues have increased
22 percent in the last year while the revenues from eBay’s
retail operations have increased by just 3 percent. With
mobile payments on the verge of erupting into a multibillion
dollar industry in the next few years, analysts
predict that PayPal’s revenues will overtake those from
eBay’s marketplace by 2014.
The good news for the rest of the commercial Web is
that PayPal is a highly accessible partner for anyone who
operates an online business. The company recently announced
a handful of new products in the mobile and
payments spaces that opportunistic Web professionals
should consider:
• PayPal for Digital Goods — a micropayments solution
that lets consumers pay for digital goods such as games,
music and videos in as little as two clicks, without ever
having to leave a publisher’s site. The new solution will
be integrated by Facebook to make PayPal the social network’s
new digital goods payment method, offering
users the fastest, safest and most cost-effective solution
for sending and receiving micropayments of under $12.
Other companies signed on to use PayPal to monetize
the growing opportunity in digital goods include
Justin.tv, Ustream, FT.com, Autosport.com, Ooyala,
Plimus and Tagged.
• Mobile Express Checkout — A mobile payments
system that will initially be available on Apple’s iPhone.
Mobile Express Checkout will work
across apps and eventually across
platforms. Merchant partners such
as Starbucks have reported doubledigit
sales growth on their mobile
stores since adding the feature in
beta testing, and PayPal says the
product is easy to use for existing
merchants who currently use Express
Checkout on their Web stores.
• Titanium+Commerce — In partnership
with Appcelerator — the
makers of the cross-platform mobile
development tool, Titanium — Pay-
Pal launched this mobile commerce
product in the beta development
stage at its PayPal X Conference
in the fall. It is a developer toolkit
that will allow merchants to build
cross-platform apps with assorted
mobile commerce features that can hook directly into
PayPal for payment and processing.
• Mobile Payments Library — A new functionality
targeting subscription businesses that will enable preapproved,
chain and split mobile payments to be
processed through PayPal accounts.
• Mobile Location for iOS — A mobile app that uses
geo-location technology to help users find businesses
that accept PayPal for payments. The participating merchants
can send consumers daily deals, coupons and
other promotions through their phones. Initially, the
app will have support for the iPhone, but Android and
Blackberry support is forthcoming.
• T-commerce—The “T” stands for television — that’s
right, television commerce. This product is under development,
but the idea is to give consumers access to
their digital wallets through a Buy button on their TV
remote controls so that they can buy product they see on
Internet-connected television. Stay tuned.
As some of the most influential companies on the Web
are realizing, PayPal is a partner worth having right now.
About the Author: Linc Wonham is Website Magazine's associate editor.


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