PayPal to grow through using mobile applications, targets SMEs

Online payment service PayPal says it intends to build on its customer base of three million active users and 30,000 businesses by introducing new mobile products and development options so businesses can gain revenue while using the platform.

The company, owned by online auction house eBay, says it intends to release APIs for developers within the next quarter so businesses can create their own applications with a PayPal interface in the hope it will increase transaction volumes.

Frerk-Malte Feller, managing director of PayPal Australia, told SmartCompany SME customers are beginning to use PayPal more frequently in order to gain new customers.

“Brand names familiar with customers have been using PayPal, but I think the real secret truth of PayPal is that there is value in the number of SMEs as merchants. It’s an area we are seeing a lot of demand for, particularly in that SME space.”

“We are seeing a rush of businesses of that size moving online, and businesses are transacting more. We see a large amount of businesses using PayPal to accept online payments on the web, usually because it’s an option that isn’t costly and it’s convenient. We only charge a transaction fee and SMEs find that attractive.”

But while PayPal is hoping to increase its business presence, it also admits the strength of online retail in Australia isn’t quite comparable with some overseas markets, specifically in the US.

Feller points to a number of larger retailers, including department store giant David Jones, who appear to be experimenting with online retail and pushing more product online. He says this is a good thing, but retailers are still catching up.

“I think that by international comparison, Australia lacks a more developed market but I think retailers have realised that and are moving online. The interesting thing is that businesses now absolutely do feel the need to go online. And the reason they know this is because a good proportion of online monies spent are going overseas.”

Feller says businesses in Australia need to make their online payments system easier, and their prices more accessible, as consumers choose to shop at online destinations based overseas which often provide cheap products and shipping, particularly in books and fashion.

“I think the next couple of years will some dramatic growth in eCommerce, I think SMEs are equipped to go online with improved internet access and online applications.”

PayPal is also hoping to expand its customer base by using mobile applications. Currently the company has released a fairly detailed iPhone app, allowing users to share costs and organise different payment systems.

“The question now is really, is the format we need mobile or online? But that’s a distinction that is becoming more blurry, because you have phones now that are just always online, and soon you’ll have 4G where you won’t even notice a speed difference. We’ve been able to take advantage of the web on those platforms.”

“Now you also have platforms such as Facebook which offer a different layer of application development, and in the next quarter between May and June we’re launching APIs to help developers imbed the PayPal payment engine into whatever app you’re developing.”

Feller says the company hopes this will provide businesses with the opportunity to use PayPal in instances where, previously, it might not have been appropriate. He says users should be able to buy everyday items like movie tickets, (complete with a digital barcode on the mobile screen as a ticket), restaurant meals and other types of entertainment purchases using a mobile app.

He also estimate that about 50% of online shoppers already have a PayPal account, and so while it cannot target new demographics, necessarily, it wants to grow by opening up new ways through which users can pay for everyday items.

“You’re already having the first examples today of being able to pay your uni tuition, your school or local council fees, through PayPal. I think we’ll be able to integrate online banking as well and get the benefit of accessing payments to accounts all over the world.”

“I think consumers really like that flexibility, and it has made us a preferred payment method. We’re looking at allowing users to pay online, but we’re really thinking about what other situations there could be where users could pay through PayPal. What could we do to make it better?”