Mobile payment volume increasing on PayPal
Earlier in this series, we reviewed why eBay Inc’s (EBAY) earnings disappointed yet again. Meanwhile, PayPal is growing strong. PayPal’s revenues grew 20% year-over-year in the last quarter, while eBay’s Marketplaces revenue grew only 6%. More importantly, PayPal’s mobile payment volume increased by 72% in the last quarter, so that mobile now accounts for 20% of total payment volume.
Growing transaction volume through mobile is important for PayPal because of the mobile commerce market’s huge growth prospects. According to a report from eMarketer, and as the chart below shows, the U.S. retail mobile commerce market is expected to grow from $42 billion in 2013 to $133 billion in 2018 at a compound average growth rate of ~26%.
Competition in mobile payments market increasing
Earlier this month, eBay decided to spin off PayPal so that both companies can align their growth strategies separately. Meanwhile, PayPal’s competition in the mobile commerce market has increased rapidly. Apple Inc (AAPL) introduced Apple Pay a few days ago, while start-ups such as Stripe and Square are also emerging as potential threats to PayPal.
For more on this topic, read Market Realist’s article, Must-know: Why did Amazon launch a mobile credit card reader?
Incidentally, Stripe has partnered with both Twitter Inc (TWTR) and Facebook Inc (FB) to let users purchase goods directly from the social network sites. Learn more by reading Why Stripe has emerged as a competitive threat to PayPal.