As you’ve probably noticed, PayPal launched its long-awaited mobile service today, ready to bring down the pain on all other pretenders to the mobile payments crown.
Or is it?
There’s little doubt that PayPal will make a big splash in the US’ nascent market; after all, that’s what big brands do. It’s got a huge base of existing users, including both consumers and merchants to draw from, and it’s got a proven, successful business. Those factors might be enough to overcome the awkwardness of its initial efforts.
There are two parts to the service: the mobile extension of its standard person-to-person payments, which can be initiated via SMS or an IVR call, and PayPal then calls back with an IVR prompt asking for a PIN number to confirm the transaction before notifying the recipient. The other is called “Text to Buy”, and as advertised, it lets users buy stuff via a text message. It works in the same way: users SMS an item code to PayPal, which then calls back to confirm, then the item is shipped to a user’s home address.
The P2P payments stuff is pretty basic, and it’s hard to see it gaining much ground — it doesn’t seem to really address a market need that’s not already answered by existing products, whether it’s currency or PayPal’s Web service. Do people really have that great a need to send each other money in a manner other than what’s currently available?
The Text to Buy side is more interesting, as it’s not hard to see how it could become a very popular payment method for some merchants. Interestingly, it doesn’t seem geared at all towards mobile content, which is where many people said PayPal could make a huge initial impact, given the large share of revenues operators take for reverse billing. It also seems geared toward payments that don’t happen face-to-face, perhaps because of the speed of the system — one reader wrote in and said it took him six minutes to complete a transaction. That’s a long time to stand at a cash register. I do think this is a fairly cool system for buying products from ads or at events, for instance. But for real-time, face-to-face transactions, it’s still too slow.
So does PayPal do better according to the rapidly-getting-famous Buckley’s First Law of Mobile Payments, which says “If the transaction process is any more complicated than using a credit card or cash, it will never succeed” than other companies like Mobile Lime or TextPayMe? Not necessarily — particularly for users that don’t have credit cards and have to keep refilling their PayPal accounts and tracking the balance, which at this point it sounds like you can still only do from a PC. The Text to Buy stuff is getting there, though.
The problem with PayPal is that by trying to be more than just a payment mechanism, they’re adding complexity in to payments. Their separate accounts and systems adds in an additional layer between users’ credit cards and bank accounts and the people they’re trying to pay. That’s why paying via reverse billing is so popular with consumers — it’s incredibly easy. No new account, no extra bill, they just pay.
The breakthrough this market is waiting for isn’t PayPal — sorry, folks — at least not in this incantation. It’s still a touchless IC platform that supports both physical and online purchases. What’s holding back mobile payments currently, for the most part, is that operator revenue share. But that’s not a technical issue or even a societal one, just a flawed business model. PayPal’s real impact in mobile, rather than its actual product, may be to force that onerous revenue share down to more acceptable levels. But any mobile payment system can’t ignore mobile content, and that’s where the biggest opportunity is. But it’s also the one place where a system will butt heads with operators — so you have to wonder if PayPal’s avoided it intentionally.
[tags]paypal, mobile, mobile payments[/tags]
Use PayPal Mobile on your Treo…
PayPal has launched a new service, PayPal Mobile. You can now send and receive PayPal payments, as well as purchase goods and services from your mobile phone.
There are two parts to the service. One is simply the mobile version of the standard Pa…
first six digit common short code I have heard of in US, but I tried it from cingular phone and got no response.
[...] Update: Carlo at Mobhappy is taking the opposite viewpoint. He thinks the complexity of setting up that additional PayPal layer will be the main thing that hinders adoption. [...]
[...] I think Carlo really nails it in his writeup of PayPal mobile. I would just put some additional stress on the “force that onerous revenue share down to more acceptable levels” role that PayPal can play. I’m very very happy to see something like this happen outside the carriers just because I suspect it will make the carrier solution down the line much more palatable. Cellular carriers have one really solid competitive advantage over other kinds of networks we see springing up, and I think it’s their billing relationship with their customers. If carriers can find a way to make that a service they provide to content providers and other online services it gets interesting. Right now they’re trying to use that billing relationship to try to control everything that the cellular user touches. That’s not going to work long term, there’s only so much you can roll up under one roof, and carriers just don’t have any competency at all in the things they’re trying to roll up. [...]
GNC-2006-03-24 #157…
Well I have a little tale to tell about a hard drive going to hard drive heaven and a great lineup of news and information and a few mini rants on the side. [Save 10% on any order at GoDaddy.com!]……
[...] PayPal last week took the wraps off its initial mobile offering, and as I pointed out, it held few surprises beyond the fact that it ignored mobile content — when they was the very place many people felt it would attack first, and could affect the most change. [...]
[...] This is where new mobile payment systems like PayPal come into the frame, exploiting the need for a more equitable revenue-sharing system. As I’ve said before, the impact will either come from PayPal making headway in the space, or by forcing operators to lower their cut. It seems especially egregious in this case since it’s a charitable offering — is there anybody out there than can speak to how non-US operators deal with this sort of thing? [...]
[...] PayPal Mobile has launched, albeit not in germany yet. [...]
[...] More than a year ago, PayPal Mobile launched to great fanfare. As I noted at the time, it seemed a bit odd that they’d focus on person-to-person and physical goods payments and ignore mobile content completely. Now, some 15 months later, PayPal Mobile remains pretty invisible — as does any PayPal offering geared towards mobile content. [...]
[...] PayPal Mobile Launches. Does anyone want or need text to buy? My credit card is faster, so is my computer. Why should I triple tap type? [...]