As much as it hurts me to say it, I think we may be at the end of an era. Once a behemoth, PayPal is now struggling to stay pertinent, relevant and useful. Now, PayPal sits at a turning point. Its move forward strategies will undoubtedly hold the key to its success and potentially, its existence.
PayPal: Oh PayPal! How I love you! Your quirky start-up attitude, even as you grew into a tech adolescent. Your awkward stage when you grappled with the acquisition of multiple subsidiary companies by your motherland (eBay)-- some of which were incredibly successful (Bill Me Later, StubHub, RedLaser) and some of which are still percolating to produce a return (the much hyped Zong). You even remained stable in the midst of the selling off of your brother-from-a-different-mother, Skype (sold to Microsoft in late 2009).
Then a turning point happened, mobile payments spread onto the scene quickly. The geekers and the gawkers were beside themselves with the possibilities-- oh the countless opportunities!!-- that bluetooth, RFID (and its cousin/child NFC) held. Pay and go stickers were all the rage. You watched as your brethren, Bling Nation, attempted to make the sticker play by tying it to users' PayPal accounts. By 2011, Bling Nation had ceased operations. I understand what you must have been feeling-- everyone you thought would be around with you into the future were slowly falling by the wayside. Maybe you were a little gun-shy after that-- totally understandable! As your parent company publicly said that they didn't see the future in NFC, you steadfastly continued moving forward.
You were still cautious, curious even, as you proceeded. You needed something that would allow you to make that quick branch between physical and digital-- a way to capitalize on consumers in their pockets and in the store so that they could access you wherever they were. So you struck a deal with Discover to leverage their terminals to access the PayPal system so that you could get in on some of that easy terminal money. You were smart and accepted you were wrong in underestimating the volumes behind mobile payments. Now, you could have the best of both worlds! You can still have mobile capabilities and leverage an existing players' terminals-- it was genius! Not to be stopped in your slow, very humble expansion (maybe you're just trying to fly under the radar), you quickly established your own terminals in Australia, with fees that would be "on par" or with a "slight premium".
Your Future is still uncertain, but one thing is for sure, it's a good thing that you didn't bail out completely of the mobile payments game, considering you hit record mobile transaction volumes during the December 2011 holiday shopping season. However, be careful my dear friend! Customers seemed to be pretty surprised by the ease of use of your new terminal systems in Australia, but few customers knew it existed (it was rolled out in small businesses) and even fewer were using the check-in features that you had built into the system. Beyond low consumer awareness, you're playing with fire with those potential "slight premium" fees! In a world where we've already seen the cannibalization that results from Square (to your PayPal Here), the Google Wallet (to your traditional web-based payment model) and the hype around Apple Payments occurring through Bluetooth (poor Bump! What happened?!)
I wish you the best as you go forward into the great unknown. But be careful! In order to maintain your supremacy-- your "tech titan" card that gets you into that special club where Google shoots pool and Apple watches games on the big screen--you have to put more work into being a leader. Although your attempts so far have been strong in terms of thinking, you have been overly cautious in not wanting to have a "first mover" mentality. Your Pay Here happened after Square, but I won't fault you for that! Lots of folks decided to jump on the bandwagon after Jack Dorsey took the hit for market testing that crazy idea. But Google beat you to the punch in introducing a wallet! I know, I know, you don't believe in the wonders of the wallet, but bottom line is that Google made it into physical stores before you. How could this be? Play to your strengths my dear friend, push hard in the online space, but begin to branch into those physical locations before Google takes all of the physical footprint. Your direct relationship with merchants, particularly with the smaller ones (which, by the way, account for the greatest volume of transactions), should be your advantage. Making it easier for them might require more investment on your part, but it doesn't mean that it won't pay off in the end. After all, PayPal is "The Safer, Easier Way to Pay".
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