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Table of Contents

Lead Story

Bitcoin gold rush continues

Ann Train

News

Industry Update

CFPB urges faster, safer consumer payments

PayPal gets wings, makes mobile play

ETA returns to San Francisco for Transact Tech

Bitcoin exchanges gain traction, dodge VAT

PCI SSC revamps P2PE, device standards

Features

Pitfalls of proliferating payment speak

Serving the connected customer of the future

The Mobile Buzz: Digital wallets face uphill battle

Views

New credit card scam at resort area hotels

Chris O'Donnell
Instabill Corp.

Insider's report on payments: Fighting online scammers

Patti Murphy
ProScribes Inc.

The most valuable merchant portfolio

Adam Hark
MerchantPortfolios.com

Education

Street SmartsSM:
How can I grow my business?

Jeffrey I. Shavitz
TrafficJamming LLC

Staying informed in the payments biz: A sane approach

Jeff Fortney
Clearent LLC

EMV: The clock is ticking

Michael Gavin
Cayan

The one man show: Selecting ISO partners

John Tucker
1st Capital Loans LLC

Company Profile

Opus

Topcreditcardprocessors.com

New Products

Global payments, localized currencies

Snapcard
Snapcard Inc.

Multifaceted, omnichannel POS technology

Retail Pro Prism
Retail Pro International LLC

Inspiration

The Jurassic world of work

Departments

Readers Speak

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

August 10, 2015  •  Issue 15:08:01

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PayPal gets wings, makes mobile play

Upon spinning off from parent company eBay Inc., PayPal Inc. signaled it wants to become dominant in the mobile payments space. "Mobile technology is transforming payments, making it easier, safer and more affordable for people to move and manage their money than ever before," said PayPal President and Chief Executive Officer Dan Schulman in a July 2015, statement. "As an independent company, we see tremendous opportunity for PayPal to expand our role as a champion for consumers and partner to merchants, and to help shape the industry as money becomes digital at an increasingly rapid pace."

PayPal, which re-listed on the NASDAQ exchange on July 20, was founded in 1999 to facilitate online payments. The company was listed on NASDAQ until October 2002, when it was acquired by the online auction giant eBay, for $1.5 billion. eBay has since helped to fund much of PayPal's expansion. PayPal became involved directly in merchant services in 2004 with the launch of the iTunes Store; eight years later, in May 2012, it began supporting in-store payments with PayPal Here. In 2006, PayPal introduced its support for mobile payments using SMS technology. Soon after, it received a banking license from Luxembourg.

Strategic acquisitions

More recently, eBay purchased four companies with mobile payment capabilities to bolster PayPal in preparation for its spinoff. These are: Venmo, a licensed money transmitter; Braintree, an online merchant acquiring firm that previously owned Venmo; digital remittance company Xoom Corp.; and Paydiant Inc., a cloud-based mobile wallet platform.

Immediately following its return to NASDAQ trading, PayPal heralded a deal with TransferTo, which specializes in mobile prepaid top-ups. The arrangement allows Canadians to pay for mobile airtime using their PayPal accounts. In a post on the online investment research platform Seeking Alpha, LN Investors stated PayPal was ready to expand in the mobile payments space. Describing the recent acquisitions, LN wrote, "With this kind of firepower, I'd say the competition had better watch out for an unleashed PayPal."

Visa Inc. CEO Charlie Scharf said in a call with analysts that he isn't concerned about PayPal posing a competitive threat. "[W]e actually don't spend a lot of time thinking about what PayPal is doing," he said. Scharf also said PayPal relies on Visa processing rails for a large number of the payments it handles.

Strong balance sheet, analysts impressed

PayPal begins anew as a public company with a strong balance sheet – "more than $6.5 billion in cash, and no debt," Patrick Dupuis, PayPal's Chief Financial Officer noted in a statement. "Globally, PayPal processed more than $250 billion worth of payments in the last 12 months and more than 4 billion transactions for customers in 203 markets last year," he said. Included in those 4 billion transactions were $46 billion in mobile payments, Dupuis said. In all, PayPal generated $8 billion in revenues for eBay last year.

Analysts are generally positive about the prospects for an independent PayPal, which closed on its first day of trading, July 20, at $41.30. "The company has a big head start over its [mobile] wallet competitors in terms of trust and online acceptance, which should allow it to benefit from the rapid growth of digital payments over the near term," analysts at Morningstar Equity Research wrote in a report released on July 20. The report noted ample opportunities for global growth.

Jim Sinegal, a Morningstar analyst and primary author of the report, said the spinoff positions PayPal well to woo merchants looking for new acquiring partners. "So many merchants compete with eBay (Amazon, too) there's been a reluctance to use these firms for payment services," he said. Sinegal added that Paydiant already runs several payment-driven payment platforms, most notably CurrentC, the mobile platform backed by leading merchants through the Merchant Customer Exchange.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | USAePay | Humboldt Merchant Services | Impact Paysystems | Electronic Merchant Systems