PayPal looking good despite increased competition

PayPal’s president Scott Thompson announced at a conference recently that by the end of the year the majority of eBays payment volumes will come from its merchant services and not from eBay, as it has in the past. Currently 51% of PayPal’s payment volumes come through eBay, however with the launch of PayPal’s merchant services which are used by websites such as Delta Airlines and Starbucks this is set to fall below 50%.

eBay purchased PayPal in 2002 for $1.2bn and since then it has considered making PayPal the only payment option on the international auction website. Even before eBay purchased PayPal the majority of PayPal’s payment volumes came through eBay.

This announcement underlines PayPal’s strong position despite increased competition in the online payment service market. Google Checkout launched in 2006, and has since been banned as a payment method on eBay. More recently Amazon, eBay’s biggest retail rival has launched an online payment service called Checkout by Amazon.

Despite this increased competition (and the global economic slowdown) Thompson believes PayPal’s payment volumes will continue to rise. In the second quarter of this year PayPal reported net revenue of around $602m which is 33% up on the same time last year.

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