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PayPal Bets Its Future on Mobile

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“We were late to the Internet payments,” says Osama Bedier, VP of platform, mobile and new ventures at PayPal and one of the oldest employees of the company. “We are not going to make that mistake with mobile and we are all in.” His words sum up PayPal’s (s ebay) future. Today at its annual developer conference, Innovate 2010, PayPal will start outlining its plans to become a major force in the world of mobile payments.

While folks like Apple (s AAPL) and Google (s GOOG) have their own plans for m-commerce domination, PayPal is betting that a decade of experience and working with thousands of stores, online operations and developers are going to help the company become the third — and most importantly, neutral — option for buying stuff on your handset. Mobile payments are viewed as a the next big gold rush on the Internet and have attracted millions of dollars in funding. According to some estimates, by 2014, mobile payments will be a $633 billion market.

During its conference call with analysts last week, PayPal parent eBay (s EBAY) said the total money flowing through PayPal mobile would be around $500 million in 2010.

While Apple has been successful when it comes to selling digital goods (music, video, games and apps) via its payments platform, Bedier hopes PayPal can help actual customers benefit from the ongoing shift to “anywhere computing.” A fast growing and increasingly lucrative division of erstwhile e-commerce leader, eBay, PayPal has taken a multi-pronged approach to tackle the mobile market and is announcing a handful of new products:

  1. Mobile Express Checkout. It will be available initially on iPhones and will allow you to make purchases via two-click checkout. This will work across apps (and eventually across platforms) as more developers use a small piece of code on their apps. It will also work on modern mobile web browsers.
  2. Mobile Payments Library. The new functionality will allow for pre-approved, chain, and split payments and will be targeting subscription businesses.
  3. PayPal Mobile for iPhone 3.0. The new app uses location to find businesses that accept PayPal or BlingTag from BlingNation. Merchants can send deals and promotions, much like Groupon.

In order to get more merchants to use PayPal, the company is partnering with VeriFone, a credit card processing equipment maker. The two companies will also use Bump Technologies’ “bump to pay” feature.

And in other news:

  • Facebook is now using PayPal as a premier partner and be using PayPal for Digital Goods.
  • is also using PayPal for Digital Goods.

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10 Responses to “PayPal Bets Its Future on Mobile”

  1. Dead guy

    You can get some of the wallets some of the time (to post cc data online), but Facebook is better positioned to expose personal customer details. Whoever hosts the mega-hack that steals a bunch of money later, will be able to look back to now to remember a time when they could have stuck to service.

    Facebook is people!

  2. PayPal’s “bump to pay” feature will affect the way businesses using PayPal’s m-payment technologies design their mobile applications. This kind of new feature will need to be included on both feature phones and smartphones, as a consumer will expect it regardless of the type of device they are using (iPad, iPhone, BlackBerry, Symbian etc.) This will most impact companies using a “lowest common denominator” approach to mobile. I work for Kony Solutions, and instead of lowering the bar to meet the feature set of the device with the least complexity, businesses should work with a vendor who can deliver the highest levels of application performance and retain the native capabilities (like the ‘bump’ feature) on each device, creating a richer mobile experience for consumers.

  3. Goldflowpoints

    I think Paypal does not really have a good position for “virtual currency” such as Facebook’s credits.
    An important point for frictionless virtual currency …is often a walled garden/close marketplace …where the virtual currency can flow without any hurdle : regulation/exchange rates ….

    in the case of facebook, once the you buy credits, they can be used easily in exchange of any digital product/service within the network.
    PayPay works with real banks and uses Visa/Mastercard …in a really open network…without any real marketplace. I think eBay could do this very easily though in their own marketplace.

    In long term, i think we may see a proliferation of such virtal currencies on any marketplace : Amazon market, eBay, Facebook, AppStores ( Android, Apple,…), Carriers (airtime is nothing more than a virtual currency…and is implemented very successfully over the globe).

    What PayPal should do …(in my humble opinion) is to build an infrastructure to bridge such marketplaces. Using your facebook credits to buy stuffs in Amazon …and get Facebook/Amazon settle easily. Not sure what business model applies for such though.

    In the telco industry, my current comapany did this building bridges between carriers prepaid currencies…

  4. goldflowpoints,

    Very interesting thought. I think PayPal is in a great position to do this. However, I think Facebook might want to control the currency so they can make money on it. I know that PayPal can do a revenue share or something, but I feel like Facebook might want all the control. Maybe, if PayPal were to do this, they could do it with all the little guys that embed into Facebook and other apps/platforms. Very interesting question, though, I’ll have to reflect on this.

    What I’m curious about is to see how this will be developed:

    “PayPal Mobile for iPhone 3.0. The new app uses location to find businesses that accept PayPal or BlingTag from BlingNation. Merchants can send deals and promotions, much like Groupon.”

    Very interesting. I definitely think PayPay is positioning themselves in the right place. Amazon jumped into the mobile game early and has already made 1 billion:

  5. What would be the pro and cons for PayPal of introducing a virtual currency? If mobile payments and micro-transactions are going to be big for PayPal, wouldn’t a virtual currency dovetail nicely with this and be an attractive option for their customers across the globe? Also, if a virtual currency makes sense for Facebook, doesn’t it make even more sense for PayPal? Any thoughts would be appreciated.