I came across this today: a report that PayPal is trialing a new pay-by-phone service. Since the report seems to indicate that the trial would have been completed by now, I logged into my trusty Paypal account to see what I could see.
Lo and behold - I can now buy things using my mobile phone. You register your phone number with your PayPal account, and suddenly, you're able to send money to people via SMS. You can do this if you're in the US, the UK, or Canada. The receiver of the funds can be anyone in any of the 55 countries that PayPal supports.
Why is this a big deal?
Well, having taken a considerable chunk of business from banks, who largely failed to notice the online payment economy surrounding auctions and so forth (at least until Ebay bought PayPal), the company is now getting ready to take M-Payments business from telcos.
Did you know Datamonitor has estimated that by 2010, 1.7 billion pounds will be spent on downloads from the Internet in the UK alone? Many of these downloads are ring-tones and screen savers... paid for on a mobile phone account. Whilst estimates vary, it's been suggested that the global market for ring-tones was up to $3 billion in 2003. Almost 11% of the total global market for downloaded music, which is continuing to blow all forecasts and is changing the dynamics of music sales world wide.
That is a very significant market for telcos, who rather like being a payment intermediary - a payment aggregator if you like - that consolidates customer activity and sends it out into the payment system. You send off an SMS or let the biller know your number on a web site, and a small charge is added to your phone account. Easy, convenient, and accessible to anyone with a mobile phone account.
At the end of the month, the charges appear on your bill just like a phone call.
The key driver for a merchant adoption? Telcos - whose key business is billing very small amounts such as those incurred by making a phone call - can facilitate the transfer of money from consumer to merchant less expensively than banks who have their traditional multichannel, multicurrency, multi-everything infrastructures to support. Telcos pass on the savings.
PayPal Mobile will let you do the same thing by texting a catalouge number, with deductions coming automatically from your Paypal account. Which, conveniently, can be linked to your bank account. PayPal, not being a bank, and not having a voice network to run, operate a cost structure which means they can choose to be less expensive than a telco or a bank, even if they didn't have the ability to leverage the fact that they have more accounts than anyone else.
Interesting no? Paypal, already the biggest player in the online payments market and increasingly offering other payments services traditionally the domain of banks, have now created an offer which challenges the only other viable contender for a payments system: the telcos.
And not to put too fine a point on it, Ebay, the owner of PayPal, also now owns Skype, the worlds leading consumer IP telephony provider. Naturally, the Skype site has sophisticated links that enable you to pay for telephony services.
Ebay is the worlds biggest source of online payments via its auction ecosystem. Skype, growing apace with the adoption of consumer IP telephony either is now, or soon will be, the biggest source of micropayments surrounding voice and video communications. Together, these represent the greatest percentage of online transactions that most people are likely to make.
And PayPal is there behind both, completely eliminating the traditional payment system, and ipso facto, the role of banks in it.
How long, I wonder, until banks are so marginalised they exit the consumer payments business altogether? What's next? A Paypal contactless card or magstripe debit? I bet it happens, and when it does, will provoke a significant reaction from traditional payment system players.
http://www.moneymakerhot.com/HYIPs/PayPal_Money_Market_fund.html
Posted by: The Money Maker | December 06, 2007 at 06:18 AM
Paypal is expensive and beurocratic (ever tried phoning them!!) personally dont like them but they are here to stay and a way of allowing people who like paypal to pay you!!The percentages suck but we still make margins
Posted by: seo updates | June 16, 2010 at 01:49 PM