Nearly 20 years later, the company is still going strong, although the days of sliding by on consumer demand are long gone. Competition from sites like Craigslist, Etsy, and CafePress has made a sizable dent in eBay Inc (NASDAQ:EBAY)’s customer base. With eBay Inc (NASDAQ:EBAY)’s earnings report this week disappointing investors, the company’s one bright spot, PayPal, is drawing more attention than ever.
Boosting revenue
Revenue for eBay was good, coming in at $3.9 billion. This was a 14.1% increase from last year’s second quarter. $1.6 billion of that number was from the company’s PayPal division, which helped boost revenue 20%. Investors’ disappointment came from eBay Inc (NASDAQ:EBAY)’s guidance, with the company adjusting projected profit to between $0.61 and $0.63 per share, a number that was below expectations.
PayPal is a cash cow for the company, claiming 60% share of the online payments market. So far, competitors have failed to unseat PayPal as the preferred method of online payment, especially with eBay Inc (NASDAQ:EBAY) building PayPal into its process.
Google makes it easier
But, despite eBay Inc (NASDAQ:EBAY)’s efforts to allow customers to pay directly on its site, PayPal still requires an excessive number of steps for each payment. Google Inc (NASDAQ:GOOG) has simplified the process through its Google Inc (NASDAQ:GOOG) Checkout service, which processes transactions in a shorter time frame.
Yet, Google Checkout still lags far behind in popularity with customers, coming in as the fifth most popular online payment method behind smaller names like Authorize.net and usaepay.com. It’s important to note that Google Inc (NASDAQ:GOOG) doesn’t have to take PayPal down to succeed. The company’s ad revenue from its many services helps contribute to its annual earnings.
As the company attempts a move toward mobile, it brought in $14 billion in revenue in its last earnings report. But the big news was in its cost-per-click, which fell 4% from a year earlier while the number of paid clicks rose 3%.
Checkout is one of the many offerings from the search giant. All of its divisions work together to help Google Inc (NASDAQ:GOOG) achieve its ultimate goal: heavy use that increases its ad revenue. Through its checkout, Google Inc (NASDAQ:GOOG) allows shoppers to purchase goods through Android phones, collecting data on each shopper that can help provide more targeted advertising.
Other payment options
But, the real competition for PayPal comes from the likes of Bank of America Corp (NYSE:BAC), whose revolutionary services may beat PayPal. PayPal has made no secret of its plans to venture into the bricks-and-mortar business, but will stores go along?
