Photo: Asa Mathat | All Things Digital
Tomorrow, eBay will unveil a three-year plan for PayPal, Bloomberg says. This is because PayPal is eBay’s fastest growing unit and will soon become its largest source of revenue, and because the payments company is experiencing new threats from Google and Apple.The main threat comes from mobile, where both Google and Apple have plans to use near-field communications (NFC) to help people use their phones as wallets. PayPal has a well-regarded mobile product, but because it’s an app instead of being built into the system, it’s at a disadvantage.
PayPal’s advantage however, say executives, is that it’s focused exclusively on payments, unlike the other guys. This sounds like PR waffle but it’s actually true — making payments work is really, really hard. There are countless issues, especially around security and fraud prevention, that make it very tricky to pull off. This is why so many companies that you’d think could roll out a PayPal competitor effortlessly (Amazon, Skype, Google…) have either had middling results or not tried at all.
Another obvious competitor is Facebook with its credits system. Facebook is both a blessing and a curse for PayPal — social games represent huge payments volumes for PayPal, but Facebook might just try to replace them. Facebook’s board includes Peter Thiel, who co-founded PayPal, so he might know a thing or two about building a payments system. Other competitors include nimble startups like Twitter inventor Jack Dorsey’s Square and carrier-billing leader Zong.
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