“Paypal Spreads Its Wings”
Paypal is using information technology to open their business to more consumers. They are trying to break away from the confines of E-bay, and are trying to cater to all e-commerce. Although E-bay is a huge player on the internet, it only accounts for less than 10% of all e-commerce. The goal for Paypal, as the President Jeff Jordan puts it, “We want to be the standard for online payments.” Paypal is extending their services to large online retailers and small businesses that are trying to expand their payment options. They are allowing third parties to use their services to conduct e-commerce. Paypal’s popularity has been growing since the early 2000’s and was bought by E-bay. Paypal’s main competitors are E-bay and Amazon. Both of those companies are offering similar payment options within their sites to rival Paypal’s market share over e-commerce.
Paypal’s use among third parties opens their revenue tremendously. They were once limited by the number of online sites that used Paypal. Now Paypal is being used on Twitter and applications in Blackberries and Iphones. Paypal is trying to expand their reach in the e-commerce business. Eventually Paypal can be used for payments like paying rent and paying salaries.
Some say that Paypal is taking steps toward becoming their own credit card company. They signed a deal with GE Consumer Finance so that they now can offer lines of credit to their customers. Paypal has more subscribers than American Express has, 72 million to American Exress’ 65 million. Credit card companies are still not too worried about the moves that Paypal is making because of familiarly to credit cards such as Visa and Mastercard. Tim E. Attinger, Visa's senior vice-president for product development and management still is not afraid of what Paypal brings to the table. "Visa has built a pretty strong relationship with large merchants and small mom-and-pop operations," he says. "And at the end of the day, consumers want to put as much of their purchases [as they can] on the payment vehicle they know and trust."
I think the expanding use of Paypal is good for the consumer because it provides a safe and effective way to make transactions online. In a world where identity theft is a huge issue, Paypal safeguards your personal information and doesn’t allow the seller to see your information. Using Paypal in applications in the iPhone could bring a level of safety to everyday purchases. Pizza Hut allows you to order pizza for delivery over the iPhone. Using Paypal to pay for that pizza gives the consumer a level of confidence that their transaction was made securely.
More e-commerce options gives the consumer a choice in the way they make their online payments. Paypal offers a safe and reliable medium between the seller and the buyer. The more mainstream Paypal becomes, the easier it will be to use for everyday items and it could become an option that people use as frequently and as easily as credit cards or cash.
Matthew Boruch
http://www.businessweek.com/magazine/content/05_21/b3934111_mz063.htm
PayPal breaking away from EBay will not only benefit PayPal, it will also greatly benefit online consumers and online retailers. PayPal makes purchasing quicker and safer. Now, consumers will not have to enter their private information on every site they are purchasing from. As a result, security will be increased because a customer's information will only be exchanged between the customer and PayPal. This increase in security can lead to more consumers willing to buy off the internet. Ultimately, this can lead to a greater all around revenue for online retailers using PayPal as their form of e-Commerce.
ReplyDeletePayPal breaking away from Ebay is a very smart business decision. They have become known as the easiest way to currently make payments online. Especially with the growing e-commerce market, they would definitely be missing out if they were to be strictly an Ebay system. The idea of being able to order pizza and pay for it through a phone and PayPal is crazy. With that said, many people have done many articles on other companies creating systems like PayPal to generate some revenue from the enormous e-commerce industry. Perhaps PayPal waited a little to long to decide to branch out from Ebay.
ReplyDeleteBy expanding themselves as a form of online payment not only restricted to E-Bay, Pay-Pal will become a more recognizable company. It seems to me that those who do not shop on E-Bay are not as likely to notice Pay-pal, and as a result, not use them as a form of online payment. If Pay-Pal is able to extend their uses to other companies online, I feel that customers would be willing to use it and trust it as a reputable payment site. Also, as Matt says, this will increase revenue exponentially because they receive a cut from the payment on two ends: one being the purchaser and the other being the buyer. If they are able to expand themselve as a sole form of online payment, I believe they will become more popular, and, subsequently increase profit.
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