Thursday, 22 April 2010 17:21

PayPal Australia sees growth in mobility

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PayPal's Australian business has grown to $A2 billion in five years, but the message from the local managing director is that 'you ain't seen nothin' yet.'


PayPal is "very happy with the last five years" in Australia, local MD Frerk-Malte Feller told iTWire on the company's fifth anniversary in Australia.

With transactions totalling almost $US2 billion worldwide in 2009, and more than 3 million active Australian users and 30,000 Australian businesses accepting PayPal, the company seems to be well placed - especially as that list of businesses includes significant names such as JB Hi-Fi, Rebel Sport, Borders, Hoyts, Flight Centre, Webjet, Air Asia X, Optus, and Telstra.

North Sydney residents can even pay their council rates via PayPay, Feller said.

Approximately half of PayPal's Australian transactions related to eBay purchases, but the non-eBay segment is growing faster, driven by the growing range of merchants.

"Travel sites have very much benefited from PayPal," said Feller, for example by making it easier for people to book from overseas.

PayPal is Australia's preferred mechanism for online payments - see page 2.




So why did 29% of online shoppers surveyed by Nielsen say they prefer to pay by PayPal (something Feller described as "a fantastic result"), compared with 25% choosing Visa and 14% MasterCard?

Feller suggested there are two main reasons. One is that it provides a way of paying without sharing credit card details with the vendor (even if the payment is actually coming from a credit card), reducing the security exposure. "Consumers understand that," he said.

The other is that it is simply easier to make a PayPal transaction than it is to enter a 16-digit card number, expiry date, security code and cardholder's name.

Feller believes PayPal has room for significant growth in Australia. For one thing, the online spend is only 3% of the total, compared with around 6 or 7% in places such as the US, UK, Europe, and Korea.

While consumers are more than ready for e-commerce (almost half of the online spend goes overseas), retailers have lagged. The range of goods available is not very impressive (where are the fashion, house and garden, and sports goods?, he pondered), "and the prices aren't very attractive" especially when shipping is extra.

But traditional retailers are gradually moving online, presenting PayPal with a growth opportunity.

But that's not all, so please read on.




The other area showing promise for PayPal is mobile transactions. The company has provides an API allowing developers to embed payments into apps for the iPhone, BlackBerry, Android and other platforms, and Feller thinks this will be used in ways "we haven't imagined yet."

An existing example is an app for splitting restaurant bills (one person pays, and uses the app to make payment requests to his or her fellow diners' PayPal accounts), he said.

Feller predicts there will be even more innovation in the next two to three years than there was in the previous five.

Edited 23/4/2010 to reflect clarifications from PayPal.

 

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Stephen Withers

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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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