Everyone wants a piece of the mobile world, and the financial transaction corporate community is no exception. PayPal is making an aggressive play to take a commanding lead in mobile payments by today launching Mobile Express Checkout, their new, fast mobile solution.
PayPal is generally regarded as the most trusted and well-integrated online payments processor, so much so that its integration into Facebook was cause for celebreation; people want to use PayPal when they can, it is familiar and easy. This new mobile product by the Ebay subsidiary is their on-the-go version of the larger Express Checkout system that the company runs.
The idea behind Mobile Express Checkout is that PayPal users can simply input their personal credentials and instantly handle a purchase using their preferred payment option and shipping details. It will greatly lower the friction of mobile payments. The option is launching on iPhone and Android with select merchants at first. More retailers will be added in time.
PayPal has some 85 million members, a very active community that drives much of the world’s e-commerce. Surely it is good for PayPal to better serve them, but the financial aspect of this move cannot be ignored. PayPal expects to handle half a billion dollars in mobile transactions this year, and at just a 2% fee rate that works out to ten million dollars in revenue.
PayPal only handled some $141 million mobile transactions in 2009. If this rate of payment growth continues, PayPal and Ebay may have found a revenue and profit engine to carry them for years. According to an analyst report (please take this with a grain of salt therefore), mobile payments are to reach 200 billion dollars in 2012. While that number feels rather rosy, it points to a larger trend of purchases moving away from wired machines and to the smartphones on the go. PayPal is ready.