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PayPal prepares for competition from Google
PayPal is already a giant in the online payments world.
Over 24% of the US online payments marketshare, according to financial institution consulting firm Celent LLC. Roughly 69% of PayPal’s 4Q revenue came from eBay-related transactions. That says a lot about the huge power and influence eBay has in the global e-commerce.
Founded in 1998, PayPal boasts 96 million accounts with consumers who want to send payments online without revealing their credit-card or banking information to vendors. The successful PayPal formula includes the possibility for all these account holders to receive money just about as easily as it is to send some.
What happens when Google enters the online payment market?
Google Chief Executive Eric Schmidt already confirmed in press accounts that the company was building a payment service but he quickly denied it would directly compete with PayPal. Furthermore, Mr Schmidt said Google didn’t intend to offer a “person-to-person, stored-value payments system” which most people consider to be exactly what PayPal offers.
Mr Jeff Jordan, who is president of eBay’s PayPal online-payments unit, has allegedly spent time analyzing this statement from Google and he doesn’t believe Mr Schmidt is telling the whole story.
It’s all rumors for the time being but gbuy sounds like the term Google has coined for this new service. Also, the alleged goal is to enable anyone to accept credit cards or gain access to gcredit for their e-business. It basically announces for a complete, fast and easy e-commerce solution.
From a bird’s eye view, PayPal’s credible competition is still scarce and perhaps a little competition will do good. Perhaps PayPal will grant more creative control to their merchants, simplify the payment process or even participate more actively in the e-merchants marketing initiatives.
It doesn’t sound like it’s about lowering the cost to either the consumer or the merchant but perhaps bringing the legendary Google simplicity and straightforwardness to the online payments world. The Google brand itself might also be a huge plus.
Wether Google launches the new service quickly or not, PayPal must now content with a major competitor who’s demonstrated time and again that it’s able to bring a service to market faster than the other guys in Silicon Valley.
PayPal has a solid offering but it’s hard to imagine Google coming out with a service intended to be # 2.
This is just the beginning of an epic battle for online transaction processing.
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