Why has PayPal failed to become the universal standard for internet payments?
Payments
Asked by Question Bot05/Apr/20141 answer
1 Answer
F
Faisal Khan
Answered 05/Apr/2014
PayPal is certainly not a standard on the the Internet for payments. Whilst it is a great product (and I'm a huge advocate/fan of PayPal), but I would beg to differ from James Barrese's view point that it is hands-down the standard for Internet payments.
It might be so, if you consider the world to be limited to the size of the US borders only. In reality however, there are other countries and the US no longer enjoys being the largest market segment on the Internet. So to say PayPal is hands-down, is an obtuse view.
What constitutes a standard? The number of payments made by it? - PayPal is certainly not # 1. If we look at the total value of these transactions processed? again Paypal is not # 1.
The global reach of PayPal is very much limited. The crown for Internet based Payments (for a similar product, for number of transactions and total value of money processed) is with Alipay (product) by Alibaba (company) (renamed).
Alipay has 300 million mobile wallets and process a little less than half of China's online payments (which are US$ 660 Billion a year). No one even comes close to this number.
Go to India and ask if PayPal is the de facto method for Payments. No.
Go to Russia, same answer: No.
Go to South Korea, same answer: No.
Go to Japan, same answer: No.
Go to entire countries in GCC, same answer: No.
Go to Africa, same answer: No.
Go ask ASEAN countries, same answer: No.
Go ask SAARC countries, same answer: No.
Ironically, ask anyone of the above, what is the best brand for online payments and before the dime can hit the floor, the name is PayPal. Clearly the brand is a winner, but not by volume or value.
So by no ways or means can PayPal be declared a standard for Internet Payments. David Marcus's predecessor Scott Thompson expanded PayPal in 180+ countries, but they do business truly in only less than 50 countries and true in/out flow of funds for Internet based payments in 2-3 dozen countries. Scott expanded horizontally, but worked vertically on very few countries, something David Marcus is certainly fixing and can be seen from the state of affairs after he took command at the helm of thing at PayPal.
In order to be a truly a standard for payments on the Internet, you would have to crack the code for cross-border payments, seamlessly. Because of the huge inertia required in this space, PayPal has focused its efforts only on a few dozen or so countries for making cross-border payments seamless. Most markets are ignored or not worked upon with the seriousness they deserve. The fabric of international payments is not so easy to solve. With all my contact at PayPal, FUD and sheer exhaustion by looking at symmetrical payments hurdles, leads PayPal to serve only a handful of markets and take a wait and see approach on many other markets.
PayPal has a huge advantage of the being the brand ambassadors for Internet payments. There is no dispute there. The majority of the web you and I access is in English (barring the rest of the world that has content in their language). This is where PayPal rules. Cross-border, on person-to-person payments, PayPal excels and has a huge adoption rate, but with caveat that we exclude a lot many countries from the list.
With digital currencies becoming more main stream, and other solution providers who can on-ramp/off-ramp with various currencies and payment forms, Paypal's market dominance is fading. They equally make up for this, by increasing the power of the PayPal brand, but introducing new and innovative products in which they are no doubt front-end contenders.
Rest assured, companies like Apple, Amazon, Facebook, Google and Microsoft in the Western hemisphere, are not sitting idle. VISA and MasterCard who have entered into the wallets business - will process more than perhaps anyone else. In my opinion there will never be a company or a company's product that would be the de facto standard for Internet payments. You'll have a lot of companies claim title to the crown, but with asterisk based caveats in their statements.
It might be so, if you consider the world to be limited to the size of the US borders only. In reality however, there are other countries and the US no longer enjoys being the largest market segment on the Internet. So to say PayPal is hands-down, is an obtuse view.
What constitutes a standard? The number of payments made by it? - PayPal is certainly not # 1. If we look at the total value of these transactions processed? again Paypal is not # 1.
The global reach of PayPal is very much limited. The crown for Internet based Payments (for a similar product, for number of transactions and total value of money processed) is with Alipay (product) by Alibaba (company) (renamed).
Alipay has 300 million mobile wallets and process a little less than half of China's online payments (which are US$ 660 Billion a year). No one even comes close to this number.
Go to India and ask if PayPal is the de facto method for Payments. No.
Go to Russia, same answer: No.
Go to South Korea, same answer: No.
Go to Japan, same answer: No.
Go to entire countries in GCC, same answer: No.
Go to Africa, same answer: No.
Go ask ASEAN countries, same answer: No.
Go ask SAARC countries, same answer: No.
Ironically, ask anyone of the above, what is the best brand for online payments and before the dime can hit the floor, the name is PayPal. Clearly the brand is a winner, but not by volume or value.
So by no ways or means can PayPal be declared a standard for Internet Payments. David Marcus's predecessor Scott Thompson expanded PayPal in 180+ countries, but they do business truly in only less than 50 countries and true in/out flow of funds for Internet based payments in 2-3 dozen countries. Scott expanded horizontally, but worked vertically on very few countries, something David Marcus is certainly fixing and can be seen from the state of affairs after he took command at the helm of thing at PayPal.
In order to be a truly a standard for payments on the Internet, you would have to crack the code for cross-border payments, seamlessly. Because of the huge inertia required in this space, PayPal has focused its efforts only on a few dozen or so countries for making cross-border payments seamless. Most markets are ignored or not worked upon with the seriousness they deserve. The fabric of international payments is not so easy to solve. With all my contact at PayPal, FUD and sheer exhaustion by looking at symmetrical payments hurdles, leads PayPal to serve only a handful of markets and take a wait and see approach on many other markets.
PayPal has a huge advantage of the being the brand ambassadors for Internet payments. There is no dispute there. The majority of the web you and I access is in English (barring the rest of the world that has content in their language). This is where PayPal rules. Cross-border, on person-to-person payments, PayPal excels and has a huge adoption rate, but with caveat that we exclude a lot many countries from the list.
With digital currencies becoming more main stream, and other solution providers who can on-ramp/off-ramp with various currencies and payment forms, Paypal's market dominance is fading. They equally make up for this, by increasing the power of the PayPal brand, but introducing new and innovative products in which they are no doubt front-end contenders.
Rest assured, companies like Apple, Amazon, Facebook, Google and Microsoft in the Western hemisphere, are not sitting idle. VISA and MasterCard who have entered into the wallets business - will process more than perhaps anyone else. In my opinion there will never be a company or a company's product that would be the de facto standard for Internet payments. You'll have a lot of companies claim title to the crown, but with asterisk based caveats in their statements.