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August 21, 2014

The Four Aspects of PayPal’s Current Growth Strategy

Michelle EvansAnalyst Insight by Michelle Evans - Senior Consumer Finance Analyst

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When PayPal launched in 1999, online card payments were still a challenge for many merchants. PayPal’s great breakthrough was determining how individuals and businesses could more easily accept money over the web. PayPal’s founders figured out early on that it could make a decent profit in this low-margin business of processing transactions if it could encourage enough users to fund PayPal payments via bank accounts rather than financial cards.

In time, it was speed, convenience and security that made PayPal’s online platform popular, especially among eBay’s small-time sellers. PayPal went public in 2002, and immediately its market value skyrocketed. Within a year, eBay, which once dominated the e-commerce market, bought the start-up for US$1.5 billion, as it realised PayPal was squeezing out its own in-house payment option.

The core component of PayPal’s strategy today still hinges on this online platform that dates back to its roots. Today, the online platform enables its 150 million registered users to send money in 26 different currencies to over 200 countries and territories. Over time, PayPal has also moved into other aspects of financial services, including consumer credit, mobile card acceptance and even card issuance.

Even so, PayPal, which dominated the e-commerce storyline a decade ago, now finds itself fighting to stay relevant as consumers shift their focus to the emerging mobile channel. PayPal today is in the more established role as payment incumbent, facing increased competition from younger start-ups. The entire payments landscape today is filled with innovative start-ups all are aiming to solve problems while siphoning a portion of the payment transaction fees from more established players like PayPal.

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August 2, 2014

Arrival of Financial Cards to Latin America Led to Credit Binge

Michelle EvansAnalyst Insight by Michelle Evans - Senior Consumer Finance Analyst

View Michelle Evans's profile on LinkedIn

The introduction of financial cards to many emerging markets not only gave many consumers a new way to pay, but it also gave them easy access to credit. Consumers could fund more purchases than ever before. Of course, this newfound access to credit also came with its own set of challenges as many consumers can attest. While card lending helped some markets to rebound more quickly from the global recession or expand the economy in general, this emerging category of lending also left numerous consumers deep in debt.

The debt troubles associated with this lending type for consumers were especially pronounced across Latin America more so than any other region. Three Latin American countries (Colombia, Argentina and Chile) ranked in the top 10 for the fastest growth in card lending debt since 2008. In addition, out of the top 15 markets with the greatest reliance on card lending as of 2013, four are located in Latin America (Venezuela, Colombia, Argentina and Brazil). In fact, Latin America is the most reliant on card lending only after Asia Pacific, which was heavily influenced by China. 

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August 1, 2014

Euromonitor to Speak at Cartes 2014

CartesLogoEvent: Cartes: Secure Connexions

Date: November 4-6, 2014

Location: Paris, France

Event Description: The landscape of payment in the world is changing, non-bank players are emerging, offline – online – mobile: multi-channel era is on its way. As the world becomes more integrated and interconnected, it is important to have a level of trust while maintaining security between transactions. Moreover, new threats appear and thus new countermeasures are needed. Secure identity has become a critically important issue for citizens, enterprises and governments.

The 2014 conferences will provide an insight into major trends shaping the future of payments, digital security, identification & mobility.

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July 23, 2014

Open-Loop Pre-Paid Cards: The Fastest Growing Card Function

Kendrick SandsWith Kendrick Sands, Analyst - Consumer Finance

Open-loop pre-paid cards, which are network branded payment cards that do not have a limited pre-defined acceptance network, are the fastest growing card type in the world. These cards have proved their ability to replace cash and electronic transfer channels in several instances including government benefits and traveller’s cheques. Open-loop pre-paid cards can also help the unbanked and financially underserved by offering an alternative to traditional financial services and as a stepping-stone to other products and services.  

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July 17, 2014

Techweek Chicago 2014 Recap

David McGoldrickAnalyst Insight by David McGoldrick - Research Associate

View David McGoldrick's profile on LinkedIn

Techweek Chicago was held in Chicago over 23-28 June. The event centred on new technological advances that are disrupting nearly every area of commerce. Every industry – from finance and health to packaged food and tourism – is being impacted by these technological developments. The event was a chance to discuss and present on what has occurred so far and on new ideas in the pipeline.

Beacons and Mobility Create New Possibilities

Mobility was a big topic at the conference, with presenters discussing the infiltration of electronics into all aspects of life and how this will create smarter consumers, businesses and cities. Ray Velez, Global Chief Technology Officer at Razorfish, explained that growth in the number of internet-enabled devices sold will soon outpace growth in the number of children born each year. A panel on the future of location-aware marketing discussed how these internet-enabled devices (especially the combination of beacons and smart phones) could be used to enable customers to see reviews of products simply by standing in front of them. These devices could also let consumers know that items they have previously viewed online are available in the store they just entered. Others cited their potential usage in high-end boutiques and hotels, which will enable employees to recognise loyal customers and provide a personalised level of service.

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July 12, 2014

Coffee Shops are Best Positioned to Benefit from Mobile Payments

Dana LaMendolaAnalyst Insight by Dana LaMendola - Beverages Analyst

View Dana LaMendola's profile on LinkedIn

Starbucks is the reigning poster-child for mobile payment implementation in US consumer foodservice. While its popular loyalty programme and early move into mobile payments contribute to Starbucks’s celebrity status, the company’s success is also reflective of the particular compatibility of specialist coffee shops and mobile payments. In fact, coffee shops might be the best positioned for mobile payments out of all consumer foodservice operators.

The reason that specialist coffee shops are so well positioned is that their primary offering – coffee – is an everyday and oft-repeat purchase. Indeed, in 2013 US consumers averaged over one cup of coffee per day. A large number of coffee shops purchases are made by commuters looking for their morning jolt on the way to the work.  The high frequency of purchases by coffee shops patrons make these consumers prime candidates for the streamlined payment methods and loyalty benefits afforded by mobile payment technologies. Furthermore, coffee shops are most attractive to demographics that have both access to and interest in mobile technology: affluent consumers, and younger tech-savvy consumers like students.

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July 10, 2014

Five Key Takeaways from Starbucks' M-Commerce Success

The Starbucks mobile payments app has provided one of the best case studies for how to drive consumer adoption of in-store purchases made via a mobile phone. For retailers or foodservice operators looking to replicate Starbucks’ success, there are several best practices to keep in mind before developing, implementing and launching a mobile payment app.

 Join Euromonitor in attending the Connect Mobile Innovation Summit in Chicago, IL from August 18-20th. Senior Consumer Finance Analyst Michelle Evans will be there with many others to learn more and talk about mobile payments in the foodservice industry.

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July 1, 2014

Competition Rises in Polish M-Commerce Sector

 

Competition in the consumer finance industry in Poland is at a new high as banks partner with mobile phone subscribers to bolster mobile commerce offerings. In early 2014, mobile operator Plus, TV operator Cyfrowy Polsat and Invest Bank created Plus Bank, which has 300 thousand clients and the opportunity to expand given both Plus and Cyfrowy Polsat's enormous user base. In addition to this, Alior bank and T-mobile Polska also partnered in the beginning of 2014 to strengthen Alior's m-commerce business. According to Euromontor, m-commerce is expected to reach PLN40 billion by 2019, and more mergers of banks and mobile operators are expected in the future.

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June 19, 2014

How Alibaba is Transforming Payments and Banking in China

Kendrick SandsAnalyst Insight by Kendrick Sands - Consumer Finance Analyst

View Kendrick Sands's profile on LinkedIn

Alibaba is the largest e-commerce network in the world by total retail sales.  Going public has a variety of implications for the payment space and for global internet retailing. The online payment platform for the series of websites under the Alibaba banner is Alipay, which in turn is a wholly owned subsidiary of Small and Micro Financial Services Company, which is owned by Alibaba’s Chairman Jack Ma and a series of investors. This separate company, and the subsequent other companies of Small and Micro Financial Services are not included in the IPO. The separate ownership of the Small and Micro Financial Services Company was positioned as a move to appease regulators concerned of foreign ownership of a payment platform in China. Alipay is the largest third party payment platform in the world by several metrics and is poised to expand even further as it reaches beyond its domestic borders.  Alipay is already accepted on other e-commerce sites not owned by the Alibaba Group. Alipay may have initially reflected PayPal’s structure, but it has quickly grown into a variety of new channels and now could provide a few lessons to PayPal on how to address more of their customers’ needs. In under a decade Alipay has become roughly twice the size of PayPal by total users, processed value and four and five times as large in terms of number of transactions and mobile processed value respectively. However, Alipay is primarily constrained by its domestic market and internet retail value is expanding at a slowing rate in China suggesting Alipay will need to move overseas to maintain growth.

Continue reading "How Alibaba is Transforming Payments and Banking in China" »

June 5, 2014

Have we Reached a Tipping Point in the Payments Industry?

 

New technologies could soon uproot traditional means of payment as companies such as Isis, Weve, LevelUp and MPayMe threaten the long established method of paying by a card swipe. However, the industry is still a long way from complete disruption as these technologies still rely on the card payment infrastructure to conduct payments. Mobile payment products do exist that circumnavigate card payments and rely on technology such as electronic funds transfers, but in the short term traditional payment providers don’t have to worry about losing business to disruptors quite yet.

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Recent Posts

The Four Aspects of PayPal’s Current Growth Strategy

Arrival of Financial Cards to Latin America Led to Credit Binge

Euromonitor to Speak at Cartes 2014

Open-Loop Pre-Paid Cards: The Fastest Growing Card Function

Techweek Chicago 2014 Recap

Coffee Shops are Best Positioned to Benefit from Mobile Payments

Five Key Takeaways from Starbucks' M-Commerce Success

Competition Rises in Polish M-Commerce Sector

How Alibaba is Transforming Payments and Banking in China

Have we Reached a Tipping Point in the Payments Industry?