eBay Inc (EBAY): The Making of A Payments Powerhouse

Page 1 of 2

eBay Earnings ReporteBay Inc (NASDAQ:EBAY) has always been under the shadows of its high-flying rival, Amazon, in the e-Commerce business. However, eBay has steadily transformed itself from a standalone auction-based company to a major payments powerhouse. After a number of shrewd acquisitions the company now has an enviable portfolio of Internet companies. The combined entity is now slowly becoming a leader in the payments business powered by its PayPal division.

Growing Payments Ecosystem

PayPal has been growing at a rapid rate and now boasts of more 122 million active customers. PayPal’s presence in mobile is extremely strong and in 2012 mobile payments represented 10% of all transactions on the PayPal platform. Total payments on mobile last year were $14 billion and the management expects it to surge to $20 billion in 2013. The company’s mobile app has been downloaded on more than 120 million devices, and will be a great driver for future growth.

There is little doubt over PayPal’s utility and value proposition for the consumers in terms of offering a low cost and secure payment mechanism online. eBay’s growth has been increasingly coming from the payment’s division and the company’s Bill Me Later (BML) segment, which provides consumers credit at the Point-of-Sale (POS) checkout. The company’s management is strongly focused on making PayPal a leader in not only online, but on mobile and more importantly the huge offline market.

Wide Rollout of PayPal Here

The company will be launching PayPal Here, which is a clip on mobile-based card reader that allows merchants to accept payments anywhere with a mobile device and the PayPal Here App. The PayPal Here card reader will lock horns with Square, which is a leading mobile based payments enabler. Privately-held Square is backed by big names like Visa Inc (NYSE:V), Starbucks Corporation (NASDAQ:SBUX), and Richard Branson and is expected to IPO in the coming years. Square is already being used in thousands of Starbucks stores and processing millions of transactions daily.

However, the PayPal brand has much wider brand recognition around the world, and also undercuts Square’s swipe fees of 2.75%, and comes in at 2.70%. PayPal Here was previously being tested in a handful of cities, and will be widely launched across the U.S. in 2013, and should gain a lot of market share from the growing mobile payments space.

Eyeing the Huge Retail Market

PayPal has its sights set on the huge retail market, not only with mobile card reader, but also on offline check-out. PayPal has signed up a number of big retailers for providing Point of Sales (POS) solutions that will enable PayPal customers, to make payments through their accounts and is now accepted in more 18,000 locations throughout the U.S. Not only that, the Company struck a marquee deal with Discover Financial Services (NYSE:DFS) , which will bring PayPal to more 7 million retail locations that currently accept Discover.

Discover also has a huge global presence and PayPal will be available in the various international merchant locations as well. However, retail POS locations have lower profit margins relative to PayPal’s other payment solutions and would require high volume of transactions and significant customer adoption, while facing high expectations from offline retailers.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!