Payment Observer

The Latest News, Industry Insights and Research Findings on Global Payment Markets

25Jan/12

Mobile Payment: The Big Picture

By Martin Schuppelius

Payment Observer spotlight company. See more details here about one of the up and coming service providers in the financial services for small business.

The official NFC-Logo

Although they idea to pay with a mobile phone has been hyped since the late 1990s, only a few countries have successfully implemented such services. Over the last few years, some major players have entered the mobile payment space. Currently the focus of the buzz is on Near Field Communication (NFC)-based services that support close proximity mobile payment.

Mobile payment is being adopted all over the world in different ways. In this article we provide a brief overview on the mobile payments.

Broadly speaking, mobile payment refers to all kinds of financial transactions performed from or via a mobile device. There are four main types of mobile payment: carrier billing, mobile wallets, mobile point of sale and mobile banking. In addition, there are a couple of other mobile payment solutions such as the SMS-based p2p money transfer service M-Pesa in Africa and Starbuck’s proprietary mobile loyalty and payment app. Also there is a lot of talking these days how mobile wallets will replace physical wallets and mobile banking is going to change the way we bank.

Carrier billing

Carrier Billing Paymet Flow using the example of Cashlog

One of the easiest methods of paying using a mobile phone is payment via a mobile phone bill. It is a very competitive market and many companies such as Boku, Zong and Atlas offer worldwide mobile carrier billing services. In detail, carrier billing can be realized via different schemes: premium SMS text, premium rate numbers, mobile web (WAP) billing and direct carrier billing. Today, carrier billing is mostly used for micropayments and purchasing digital goods such as ringtones, wallpapers or virtual items in online games.

Mobile digital wallets

A digital wallet works much like a physical wallet. It is a service that allows the user to store and use electronic money or shopping information. Recently there has been a big hype about implementing digital wallets on smartphones and tablets. Mobile wallets, such as Google Wallet or the mobile PayPal app usually feature contactless technologies such as NFC, QR-codes or location based services. Using those mobile digital wallets, the user can use his smartphone to pay both online and at retail stores.

Mobile point of sale

Mobile Card Reader and App using the example of Intuit GoPayment

Mobile POS solutions such as Square in the US and iZettle in Sweden allow retail merchants to process card payments via their smartphone or tablet. Usually the combination of a small card reader that connects to the mobile device and an installed application enable the merchant to receive payments without the need to buy an additional device.

Mobile banking

Mobile banking provides banking and financial services including the initiation of transactions or balance checking just like online banking services. This includes the use of mobile web pages as well as dedicated smartphone applications. In addition, some mobile banking solutions can also be used to make micro-transactions or contactless payments directly via the mobile phone.

16Jan/12

EBay Expects More Than $8B in Mobile Sales Volume; PayPal Mobile Payment Volume to Double in 2012

By Gary Merrett

Payment Observer has details on multiple companies that provide funding, atm, and credit card processing services. Get more information and details here.

interim President of PayPal John Donahoe announced that eBay is expecting more than $8 billion in mobile gross merchandise volume in 2012. He also projected that PayPal will process more than $7 billion in mobile payment volume in the next year. This is almost double the $4 billion mobile transaction volume of 2011 (and ten times the $750 million of 2010).

The growth is driven by an overall increase in customer adoption of mobile shopping and mobile-optimized checkout flows. As the worlds of offline and online commerce are already blurring, mobile is becoming more important to provide consumers new ways to shop. “The success of eBay and PayPal mobile in 2011 surpassed our expectations and we’re confident that this success will carry into 2012 as more shoppers turn to the convenience of shopping and paying via mobile at the moment shopping inspiration hits,” said Donahoe.

5Jan/12

Ebay CEO John Donahoe to Serve as Interim President of PayPal

By Gary Merrett

Payment Observer featured company can be found here at this website.

Yesterday, Yahoo announced that PayPal President Scott Thompson is joining Yahoo as new CEO as of January 9th, 2012. With Scott’s departure, eBay CEO John Donahoe will serve as interim president of PayPal.

As you may know, PayPal started as an independent company and was acquired by eBay for $1.5 billion back in 2002. Thompson has been president of PayPal since early 2008. During his leadership, PayPal doubled its user base from 50 million to more than 104 million users worldwide while the revenues grew from $1.8 billion to $4+ billion in 2011.

In an internal memo John Donahoe informed all PayPal employees: “I will serve in the interim role as President and will be meeting with the PayPal leadership team this morning to plan a seamless transition. And while I’m sure Scott’s decision is a shock to many of you, as it was to me, there is one thing I am certain of: PayPal has an enormous opportunity in front of it and we will not slow down. We will not miss a beat. And we will continue driving the incredible momentum that each of you has helped to create.”

22Dec/11

eBay Acquires BillSAFE

By Gary Merrett

Payment Observer spotlight company. See more details here about one of the up and coming service providers in the financial services for small business.

BillSAFE, a Germany-based provider a of purchase-on-invoice services. The deal follows eBay’s minority stake investment in BillSAFE in October 2010. eBay now owns 100% of the outstanding shares of the company. Terms of the deal were not disclosed.

Purchase on invoice is one of the most popular payment methods in Germany, Austria, Switzerland and the Netherlands. BillSAFE provides merchants a way to let shoppers purchase using an invoice. Customers select the item they want to buy, and then they receive an invoice for payment after the item is received.

According to eBay, combining BillSAFE with PayPal will provide a comprehensive payment service for merchants and consumers. Arnulf Keese, managing director of PayPal Germany commented: “German customers are extremely security-conscious, and they enjoy the convenience and safety of invoicing when they shop online. One of PayPal’s greatest assets is the security of our system, and we’re glad that we can now offer customers even more peace of mind with a payment method that they already know and prefer and that drives more sales for the merchants.”

19Dec/11

Interview with Holger Spielberg of PayPal Germany on the Latest Developments in Mobile Payment

By Martin Schuppelius

Payment Observer spotlight company. See more details here about one of the up and coming service providers in the financial services for small business.

Holger Spielberg, Head of Mobile Payments and Innovation at PayPal Germany

We talked to Holger Spielberg, Head of Mobile Payments and Innovation at PayPal Germany, about the latest developments in mobile payment and PayPal’s vision of future shopping. Holger has been with PayPal since January 2011. He has more than fifteen years of experience in leading positions across a number of industries, from telematics and telecommunications to mobile services. He is also involved in startups, as founder, executive, angel and advisor.

Payment Observer: Can you give us some details on the mobile payment background of PayPal?

Holger Spielberg: PayPal is the leading electronic payment method and is mostly known for its activities in the e-commerce world. But PayPal was actually founded to transfer money between Palm Pilot PDAs back in 1998. When the founders recognized that they were really visionary with their idea they started to focus on the emerging market of electronic commerce on the internet. As you know, PayPal was acquired by eBay, and that helped to further the growth and to gain knowledge in how to operate a global payment system. PayPal’s DNA is mobile. Over the last 10 years the company learned how to process mobile payments, how do deal with customers. Now we are coming back to our own DNA, and have the possibility to offer mobile payments based on the operational excellence from online payments. As I always say: If you want to offer mobile payments you have to know payments first.

Payment Observer: Mobile payment is one of the hot topics these days. A lot of companies such as Visa, Google or ISIS are starting mobile payment and digital wallet services. How do you see the market?

Holger Spielberg: We see that the lines between e-commerce and commerce are blurring, at the end of the day it all becomes commerce. The channel through which the purchase is made becomes less and less a distinguishing factor.

With regard to mobile payments, we have to differ mainly two areas: one is payments through mobile web or mobile apps – in that area PayPal is definitely a leading player when it comes to number of transactions and transaction volume. The other area is payment at the point of sale featuring proximity technology (such as NFC, QR-Codes or Audio). This area is not fully evolved yet, there is no clear leader at this point. There are a number of big players trying to enter that market because it holds enormous potential and is ripe for innovation. Banks are playing a role, carriers are playing a role and obviously credit card companies have been a player in that space for a number of years. And, PayPal is clearly on a path also to be integrated at the point of sale.

Payment Observer: Is mobile payment a “must have” feature or just “nice to have”?

Holger Spielberg: I am convinced that for merchants it’s a must have to start dealing with mobile payments today. In the near future, the number of mobile devices will outstrip the number of PCs. We believe that half of the transactions in electronic commerce will be happening trough a mobile device in about 5 years. Merchants will have to deal with mobile payments because the number of mobile devices will be so significant they can’t deny it.

On the consumer side, I believe mobile payments are currently more a nice to have feature. But as more and more merchants are providing mobile payment options the ubiquity and availability will be much bigger. In a few years mobile payments will be a must have for consumers if they want to be able to make use of offers and deals only possible at specific times or locations.

Payment Observer: Can you give us some details on the role of mobile in PayPal’s vision of future shopping?

Holger Spielberg: Our vision is to enable payments anytime anyplace by any means. We see mobile payments as a catalyst for innovation. The broad features of mobile devices allow us to change the way people are shopping and how merchants interact with consumers. Our vision includes picking up the customers really early in the shopping experience by empowering them to find product information or deals, and providing them the flexibility to choose different payment methods.

Mobile payments is not only an additional payment channel but rather connecting different worlds. We see mobile payments as a combining catalyst of storefront, online, mobile and even purchasing on the go. We provide payment options and flexibility for merchants and consumers through all channels. We believe the combination of being a bank and an internet player provides us the flexibility to think innovative along the entire shopping process. Our aim is not just to exchange the POS terminal, but to change the whole end-to-end shopping experience.

Payment Observer: Can you give a real-world example of how mobile devices can be integrated into the shopping experience?

Holger Spielberg: Just recently, PayPal Germany announced the availability of the PayPal QR shopping solution. As a consumer, if you are interested in an item you scan the QR code and add it to a virtual shopping basket and in the end pay directly with PayPal. Merchants are starting to include QR codes on advertising and in stores. Some retailers also want to enable the purchase of items trough the shopping window. Basically they can enlarge their store virtually to create more revenues per floor space. PayPal is the enabler of such multi-channel solutions by providing a secure end-to-end platform.

Payment Observer: Is PayPal relying on QR solutions only or are you also looking at other technologies such as NFC?

Holger Spielberg: PayPal is agnostic towards technology, we include everything which makes sense to us to provide a secure and stable transaction service today. We are looking at any technology including NFC, we just believe it will take a while before market readiness. We bring out our solutions based on existing technologies, whenever it makes sense to us to add another technology we will certainly do that. I would predict that NFC is moving closer into focus in the year to come.

Payment Observer: Will PayPal continue to focus on processing transactions or will it venture into other services?

Holger Spielberg: We really believe in extending the value chain and also includes special offerings, deals and coupons. The pressure on the transaction price in retail is significant, and will even grow. PayPal clearly sees additional revenue potential beyond transactions in value added services such as couponing, deals, inventory availability and product information.

Payment Observer: Can you give us some numbers on how many mobile transactions have been processed by PayPal so far?

Holger Spielberg: Aggregated over the time period between March and November 2011 we processed $165 Million in Germany. In markets with higher penetration of smartphones the percentage is even higher, about 6-9% in the UK and above 10% in Australia. A significant part of our transaction volume already comes through mobile means and mobile payments. We expect these numbers to increase significantly over the next two to three years.

22Nov/11

PayPal Launches Send Money Facebook App

By Gary Merrett

Payment Observer has details on multiple companies that provide funding, atm, and credit card processing services. Get more information and details here.

PayPal has released a Send Money application on Facebook. The App lets users send money to his/her friends on Facebook along with a e-card, photo or video that is posted automatically to the recipient’s wall.

Sending money directly from one person to another is nothing new to PayPal, the company originally started as a service to transfer money between Palm PDAs. In order to send funds to Facebook contacts via PayPal, the user has to log into Facebook and authorize the Send Money app. After login to his/her PayPal account, the client can select a recipient, the amount of money and the e-card. Person-to-person (p2p) transactions within the US are free of charge if the PayPal account of the sending person is funded by a bank account. The service has nothing to do with Facebook Credits, the social network’s own digital currency which does not support p2p transactions so far.

PayPal’s Send Money Facebook App

PayPal sees big potential in combining e-cards and p2p money transfer via Facebook – according to the Greeting Card Association Americans send 500 million e-cards each year. JB Coutinho, Senior Product Marketing Manager at PayPal commented in a blog post: “… we’re bringing the largest online payments company to the world’s largest social network to make it even easier to send money to your friends and family directly from Facebook”

10Nov/11

PayPal Releases a New Version of its Android App Featuring NFC P2P Payments

By Martin Schuppelius

Need a cash or credit card processing solution for your business? Payment Observer has more details you can learn by visiting their website.

PayPal has released Version 3.0 of its Android app, which is available for free at the Android Market. The update includes a feature to transfer money directly from one person to another (P2P) using NFC technology.

In order to use the feature that was already announced in July at their ISIS, PayPal Mobile cannot be used to pay at a NFC-enabled POS, but to send money directly from one NFC capable smartphone to another. The transfer is initiated by typing in the amount in the Request Money widget and taping the phones together. PayPal has offered similar functionality in the past using Bump but using NFC makes it easier.

Check out the embedded video to see how the PayPal’s NFC P2P Payments work:

24Oct/11

Square’s Card Reader Available In Walmart

By Martin Schuppelius

Need a cash or credit card processing solution for your business? Payment Observer has more details you can learn by visiting their website.

Bloomberg today.

The Square app, which is available for Apple iOS or Google Android, enables individuals and businesses to accept payments on their mobile devices. It can be used either by swiping the card on the card reader that plugs into the headphone jack, or by manually entering the details on the phone. The app is available for free at the App Store and Android Market.

iZettle recently received $11.2 million in Series A funding.

The company was founded by Twitter co-founder Jack Dorsey and Jim McKelvey and publicly launched in October 2010. The service has seen widespread adoption since its launch and is now processing $2B in payments per year. PayPal, by comparison, expects more than $3.5B in mobile volume this year.

Check out the video to see Square in action:

19Oct/11

eBay Expects $3.5B Mobile Payments via PayPal

By Martin Schuppelius

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During the Web 2.0 Summit in San Francisco, John Donahoe, CEO of eBay, increased the forecast for PayPal mobile payments volume. He said the total payment volume, transmitted by mobile devices through PayPal’s system, will be more than $3.5 billion in 2011. The company’s previous forecast was $3 billion in mobile payments transaction volume via PayPal this year. eBay is expanding into mobile commerce, earlier this year, the company acquired mobile payment company Zong.

The company also expects an increase in transactions for digital goods. At eBay’s X.commerce Innovate Developer Conference 2011, PayPal announced that they expect a total payment volume of $4.7 billion in digital goods.

12Oct/11

NCR, S1 and PayPal to Offer Person-to-Person Payments via ATMs

By Gary Merrett

Payment Observer industry spotlight includes small business solutions providers. Learn more on their website.

NCR today announced they will be working with PayPal and S1 to facilitate real-time person-to-person payments from ATMs. NCR is one of the largest ATM manufacturers, they currently command more than a third of the entire ATM market. The company says the service will be available in the first quarter of 2012 at NCR SelfServ ATMs in the U.S.

In order to transfer funds to another person, consumers first have to authenticate themselves at the ATM. After entering the recipient’s email address or mobile number and choosing the amount to transfer, the money will be directly credited to the recipient’s PayPal account. In case the receiver does not have a PayPal account, then he or she will need to enroll for a PayPal account in order to receive the money.

Money transfers from ATMs have the potential to become a convenient solution for person-to-person payments, given that they are available 24/7 and maintain the trust and security associated with ATM networks. Dan Schatt, general manager at Financial Innovations PayPal, said: “Offering PayPal payments through the ATM channel can enable businesses to instantly pay their overseas or domestic suppliers and retail bank customers to send international and domestic payments, all with a few taps on an NCR ATM machine.”