PayPal Hits 100 Million Users As Mobile-Payments War Heats up


Credit: PayPal

PayPal, the online payments pioneer, now has 100 million active users, according to TechCrunch — and it may need every one of them to face the coming onslaught of competition in mobile payments. The list of players racing to get into mobile payments includes tech titans like Google (NSDQ: GOOG), Wall Street banks and financial giants like Visa, and well-funded startups like Square, Twitter co-founder Jack Dorsey’s company.

Paypal has made mobile transactions a priority, and last week, doubled its estimate for the total value of mobile payments its expects to process this year, from $1.5 billion to $3 billion. PayPal, a division of the internet auction giant eBay (NSDQ: EBAY), now sees as much as $10 million in mobile transactions a day, a number that is rising quickly, Laura Chambers, Senior Director, PayPal Mobile, wrote in blog post. She said the company now has eight million customers who regularly make payments using their mobile phone.

The mobile payment market is highly contested, and PayPal faces competition from, among others, Google, which recently launched its Wallet payment system based on NFC technology (Near Field Communications). Once the infrastructure is in place and compatible phones hit the market, Google Wallet users will be able to make secure, point-of-sale purchases by waving their phones at a NFC reader while checking out at retail locations.

Shortly after Google announced its mobile payment service, PayPal sued the search giant, alleging that one former PayPal employee now working for Google stole PayPal trade secrets and another violated her contract obligation to PayPal by recruiting the first employee. Google has rejected those claims.

PayPal doesn’t have an NFC option, as present, but recently purchased a startup called Fig Card, which allows users to make point-of-sale purchases via a WiFi connection. Square, the startup founded by Twitter co-founder Dorsey, also helps merchants receive mobile payments through its Reader product.

In total, PayPal processed $27.4 billion in the first quarter of 2011, a 28% increase over last year, and contributed revenue of $992 million to parent company eBay, a 23 percent increase from one year earlier.

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