Feb 04, 2013 Dave King
If anyone doubted PayPal's role in developing mobile transactions into a powerhouse within the payments industry, they need only look at the firm's growth last year.
Parent company eBay reported that PayPal processed more than $14 billion in mobile payments in 2012, which was a whopping 250 percent increase over the previous year's $4 billion in mobile business. Previous estimates had forecast the year's total at $10 billion.
Now, the company is projecting mobile volumes at $20 billion by the end of 2013, according to Mobile Payments Today. The growth is being driven in part by the number of retailers who are signing on to accept PayPal transactions.
The company has signed up 23 national U.S. retailers to accept PayPal for point of sale payments at brick-and-mortar locations, a significant increase over the 16 retailers that eBay initially expected to have lined up by the end of last year. They include Home Depot, Foot Locker and Jamba Juice. The fruit smoothie chain is currently testing an order-ahead service at its operation in Emeryville, California. Consumers can use PayPal to place for orders by electronic payments through their smartphones and have them ready to be picked up.
"Mobile is rewriting the commerce playbook," said eBay CEO John Donahoe. "At an extraordinary pace, consumers are embracing mobile as the everyday way to shop and pay."
Global growth soars
By the end of last year, PayPal had 123 million account holders globally. In the company's fourth quarter, nearly two million accounts were added each month, eBay announced in its year-end report.
In store PayPal transactions are run through a card reader that accepts ACH cards at a charge of 2.7 percent per swipe. When the payments are made online through a mobile device, the transaction fees range from 2.2 to 2.9 percent - plus 30 cents a swipe - depending on the retailer, according to CNN Money.
eBay, which reported 2012 revenue of $14.1 billion from all its business lines, handled $175 billion in commerce volume last year. That translated into 2 percent of all retail sales worldwide, including 19 percent of global e-commerce.
At a recent conference of the National Retail Federation, the company also announced a partnership with NCR that will allow PayPal to be integrated into its payment system at both restaurants and retail stores.
However, the company has had stiff competition in the mobile field, forcing it to cut 445 jobs last October in a restructuring of nine PayPal product groups into a single operation.