PayPal Analysis, a 5 Point Outlook as it Becomes Independent

April 17, 2015     By : Ray

The entire industry is looking forward to the corporate split between eBay and PayPal. Everyone wants to know about the next big move that PayPal will make when it goes independent. We have been following some trends that hint at what the future of PayPal might look like. Here are some notable aspects:

Will you be able to pay via PayPal at Amazon or Alibaba?

There might be a fair chance of PayPal becoming a payment option for Amazon. Post the spinoff from eBay, PayPal is free to look for partnerships with other online marketplaces such as Amazon and Alibaba. PayPal has been driving massive transaction numbers from eBay in past years, and it’s unlikely that the company will build a marketplace of its own; hence it is highly expected that PayPal will partner with other online marketplaces to keep the profits coming in. There has already been demand for PayPal’s availability on Amazon so we might end up seeing PayPal on marketplaces other than eBay soon.

PayPal’s intense focus on mobile payments

PayPal has been trying hard to make a mark in the mobile payments space. Although PayPal does have mobile payment capabilities, the company has not gained traction in the space like Apple; and we know that Apple Pay entered the market much later after PayPal. Post the spinoff from eBay, PayPal will be able to direct its efforts towards mobile payments. PayPal has started taking some effective initiatives and is making strides day by day.

Recently, PayPal acquired Paydiant for a massive $280 million. Using Paydiant’s platform, PayPal’s merchant partners can now create their own branded wallets to accelerate mobile in-store payments and drive consumer engagement through mobile payments, loyalty, offers and the prioritization of preferred payment types, such as store branded credit cards and gift cards. This could help PayPal share the mobile payments spotlight.

PayPal’s other mobile payment initiatives include powering transactions for apps like Uber, Airbnb, and Houzz. PayPal has also enabled Bitcoin as a checkout option through a partnership with Coinbase. Last September, the company launched One Touch mobile payments to enable a seamless payment checkout with a single click. It seems that PayPal, post the spinoff, will come up with something big as a response to Apple Pay, Samsung Pay, and others.

PayPal’s mPOS initiatives

With PayPal Here, the company has been trying hard to make competitors like Square face the heat in the mobile point-of-sale space (mPOS). In the initial phase, the mPOS reader was merely a credit card reader that was synced via Bluetooth. PayPal has made plenty of improvements to it since then. The company later unveiled an mPOS reader with payment support for all Windows devices. The latest version of the mPOS reader comes equipped with EMV technology and NFC as well to support chip-and-PIN cards and mobile payment systems such as Apple Pay. PayPal intends to expand its mPOS business and then promote its own mobile payment capabilities to be used extensively with the mPOS, in the merchant space. Post the spinoff, this is one area where the company would indeed increase its focus. We still have a lot of micro-merchants in this country without card acceptance.

PayPal is keeping its hands full

PayPal has been investing in many initiatives over the past years that lead to speculation as to where the company might head post the spinoff. The company has delved into biometrics with support for smartphones that have fingerprint sensors. PayPal introduced payment support for smartwatches, including the Pebble watch and Android Wear devices. PayPal had also launched a credit service called “Pay after Delivery” by partnering with companies such Authorize and Cybersource. The service lets PayPal users pay for goods up to 14 days after the purchase has been made. PayPal had also come up with its own bluetooth beacon, but that didn’t made a mark in the proximity market.

PayPal has been getting hands-on experience at numerous payments and commerce oriented entities. After the split from eBay, it would be in a better position to make effective decisions as to where to focus more in the near future.

Will PayPal end up being bought by some other giant?!

Seeking Alpha had cited in an exclusive post that PayPal’s enterprise value is likely to be around $28 billion or more. This is what potential buyers would have to shell out in order to own the payments giant. So who has this kind of money? Well, I would like to cite three potential buyers here (as alternatives to an IPO, of course):

Google: the Internet giant could become a payments giant as well if it buys PayPal. Google has already started making new strides in enhancing Google Wallet and is also coming up with the Android Pay system. With PayPal integration, the Android platform itself could become a payments powerhouse driving mobile payments across millions of smartphones throughout the world and existing paypal accounts.

Alibaba: after dominating the Chinese market, the e-commerce giant has its eyes set on the US. After a record trading debut in the US, Alibaba is looking for lucrative deals, and what could be better than to buy PayPal to increase its payments strength multifold with Alipay already being a big time payments system. With ongoing efforts towards taking Alipay into multiple countries, why not simply buy PayPal which already has a global presence.

Facebook: PayPal’s ex-boss David Marcus is already working alongside Zuckerberg to transform Facebook into an ideal payments platform. Perhaps Facebook could buy PayPal and bring it back under David’s wing to speed up the payments oriented transformation that Facebook needs.

Although I have presented my views here, only time will tell as to what actually happens to PayPal. Based on what PayPal has achieved in the past, it will certainly not lose its status as one of the payments giants of the world.

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Ray

Ray has keen interest in the area of devices, OS and wireless technologies. He is a Mobile Technology enthusiast and believes that Mobility is going to completely change the way we do Payments and Commerce. He wishes to share this belief with the world by providing such content through LetsTalkPayments. Ray has done his engineering as well as MBA.
  1. #1 Vanessa Culver 17 April, 2015, 14:19

    Amazon has its own version of PayPal called Log in and Pay with Amazon. It’s not likely Amazon will add PayPal but they’re known for canabalizing following their customer obsession principle, so it’s possible but not likely.

    As soon as the spin off was announced I put my “bet” on Alibaba. I can see a bidding war happening. Let the games begin!

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