Slide 1
Pay Pal - PayPal and Mobile, Evolution or Revolution?
Federal Reserve Board
Mobile Forum
February 23, 2010
Slide 2: PayPal Successfully Bridges Two Worlds
- Global financial networks
- Internet and web companies
Notes: Simply put, PayPal is just an innovative technology platform that sits on top of the existing financial infrastructure and makes it work for the Web.
We act like the “universal adaptor” for payments on the Web.
Financial networks:- Designed for physical point of sale
- Typically local/ regional – not interoperable
- Lack payments DNA
- Lack global bank & processor integrations
- Lag in global acceptance
So, PayPal bridges these two worlds – traditional payments and the Internet
Slide 3: How PayPal Works
Senders choose from any one of multiple funding sources:
- Credit Cards
- Bank Accounts
- PayPal Balance
- PayPal Plus Card
- eCheck
- Gift Certificates
PayPal sends the money but never shares details of the underlying financial instruments used:
- PayPal Account
Receivers Choose from any one of multiple withdrawal sources:
- Physical or Virtual Debit Card
- Bank Account
- PayPal Balance
- Check
Notes: PayPal enables customers to pay in the way they prefer – whether that’s credit cards, bank accounts, or money stored in their PayPal accounts.
This model has made us very popular with consumers. But it also is the reason we’re able to keep processing costs down and pass on those savings to our merchants in the form of low fees.
Slide 4: Tremendous Customer Growth
81 Million Active
* Worldwide
*Active accounts are those that have had activity in the past 12 months. Return to text
Slide 5: PayPal Total Payment Volume
| Period | Total Payment Volume |
|---|---|
| 2003Q4 | 3,711 |
| 2004Q4 | 5,607 |
| 2005Q4 | 8,115 |
| 2006Q4 | 11,004 |
| 2007Q4 | 14,044 |
| 2008Q4 | 16,000 |
| 2009Q4 | 21,000* |
* Total dollar volume of payments, net of payment reversals, successfully completed through the PayPal system during the quarter(excludes the payment gateway business). Return to table
Slide 6: How Mobile supports the PayPal Vision…
The world’s favorite way to pay and be paid anywhere, anytime, on any device
Slide 7: New trends are driving the mobile internet…
Richer User Experiences
- Rich Devices (power, form factors, displays)
- Rich Experiences (UI, browsing, apps, services)
- Fast Networks (broader 3G rollout and coverage
Mobile data becoming mainstream
- Smartphone adoption moving from business to consumers:
- High smartphone subsidies (i.e. $240 on iPhone)
- More affordable and transparent flat dataplans
- 30-40% of new devices in NA are smartphones
- 70% of new RIM subs are consumers
- Smartphones WW Shipments(m)
- 2008 - 212
- 2009 - 280
- 2010 - 349
- 2011 - 409
- SP penetration expected to reach up to 50% in 2011 in NA and EU
New compelling content and sticky services
- App Stores shifting industry power and economics and attracting new developers and content
- Social networking going mobile
- Mobile data usage (browsing, apps) booming
- Consumers increasingly extending/enhancing online activities to mobile
- Gen Y, Z connected anywhere, anytime on any device
Slide 8:…innovation dollars fueling experimentation
Mobile Payments
Telcos Chart
- O2 moving from NFC trials to commercialization is seeking partners
- China Mobile announced partnership with Alipay on mobile payments
- Keep expanding Mpesa model to other emerging markets target Afghanistan&India)
- Launched mpass P2P service in Germany
- Rolling out P2P, Airtime and prepaid topup, seeking partnerships
HW Players Chart
- $70m investment in Obopay
- Upcoming Ovi store will accept carrier billing and card processing
- Leader role in NFC deployments
- iTunes controls m-commerce on iPhone
- New iPhone 3.0 SDK enhanced payments capabilities
- $210m Firethorn acquisition
Attackers Chart
- Google’s 250M$/year on open OS could be a Trojan horse for the expansion of G-Checkout
- Amazon offering to run apps/digital content stores
- Zong - Growing # of startups focusing on mobile payments
Visa&FI Chart
- GSMA and Visa announced partnership on Mobile Payments
- Visa launched 1st NFC commercial trial in APAC
- Barclays and Orange have announced a partnership to develop m-payments technology
- Deutsche Bank announced to partner with Luup on mobile payments for remittances
Slide 9: In the last year PP has made good progress in Mobile
Customers
- 1.4m mobile active users (7.5X)
- 400k monthly active
- 500k unique client downloads
- #1 most visited financial WAP site
Experience
- iPhone app # 4 Finance App for installed base
- Launched Android P2P 4 stars rating
- Launched eBay Mobile integration
- Feedback/ratings improved after integrating PP
- #1 M-commerce player
Financials
- Graphic Image
Ecosystem and Innovation
- Launched RIM appstore
- Engaging with key ecosystem players
- PP Mobile team contributed for 10% of all eBay Inc. patents in 2009.
Slide 10: How we think about the Mobile opportunity
CONSUMER RELEVANCE - PayPal
Market opportunity
- Mobile phones will increasingly become the main way consumers will connect to internet
- Mobile is enhancing online through access on-the-go to local search, news, socialnetworking. Mcommerce is next
Gain relevance with consumers by embedding PayPal brand in a product core to consumers’ daily lives
UBIQUITY (Emerging markets) - PayPal
Market opportunity
In emerging markets with underdeveloped banking/payments systems and high mobile penetration, mobile could be leveraged to create a disruptive payment platform
Our Goal
Support PayPal market entry in select emerging markets via mobile
3RD WAVE (Proximity)
Market opportunity
In the future, mobile phones will be able to perform secure transactions with an easy and convenient tap
Our Goal
??? Still early days…
Slide 11: Where is the money?
Mobile payments addressable markets
Remote payments chart
- Mobile Digital content - $5B
- Prepaid Airtime Topup - $10B
- Remittances - $100B
- Online Physical goods & services - $250B
- Non traditional retail: no terminal - $250B
- Traditional retail - $5T
Opportunity Timing
- Now
- Near-term (2-3yrs)
- Long-term (2-5yrs)