Online auction house and e-commerce
company eBay is aiming to talk up its portfolio of businesses,
having suffered a decline in its share price over the last few
months. eBay executives will place particular emphasis on its
payment platform PayPal, which allows consumers to make purchases
without divulging their payment card details to e-commerce
merchants.
At an annual meeting of analysts held this
month in San Jose, California, the company said it planned to
reinvigorate its presence in the stock markets and be more
transparent about its plans, strategy and prospects than it has
been over the past three years. They think that focusing on
PayPal’s potential more could help the company’s prospects.
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“We are going to give more visibility than we
ever have on our sources of revenue, and our growth opportunities,”
said PayPal senior vice-president Jack Stephenson. “The stock
market doesn’t properly value PayPal.”
Boosting PayPal’s profile
PayPal has seen a rise in its
profile in past years mainly due to its capability to provide cheap
and safe transactions and function across complex and incompatible
financial systems and multiple currencies. The PayPal unit may also
be extended into the mobile banking market, eBay said.
This has come in the wake of wider economic
troubles which have seen eBay’s share price drop to just above $10
a share, and as customers increasingly move away from auctions to
the convenience of buying things cheaply at bricks-and-mortar
locations and online at fixed prices. This has meant that eBay,
originally a consumer-to-consumer platform, has had to compete with
the likes of online retail giants such as Amazon and budget
retailer Wal-Mart.
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By GlobalDataPayPal has been a favourite of analysts’
debates, where they have urged eBay to spin it off as a stand-alone
offering. Many analysts hazard a guess that it may have greater
potential than the poorly performing eBay which is struggling to
reverse its recent bad performance.
This may not be an entirely dubious claim, as
PayPal has the potential to grow in developing economies that are
yet unbanked but do not lack online access.
Another highlighted plus was that with the
rise in online fraud, and with the rising trend of online shopping
outpacing traditional retail outlets, PayPal has real potential for
growth. On the other hand, eBay is losing favour with both buyers
and sellers.
But the jury is still out as to whether PayPal
could ever become a real threat to the global payment cards market,
or hold the potential to grow anywhere outside of the underbanked
world.
A threat to the
establishment?
Cécile Grégoire, a senior adviser on payment
systems at EuroCommerce, an EU agency which represents retailers,
told CI: “As there are still so many uncertainties and
imperfections in today’s card payment market, it is difficult to
foresee what will happen.
“In any case, retailers strongly
hope that developing modes of payments will not be subject to the
same lack of transparency, lack of competition and anti-competitive
practices as current credit card transactions.”
Company policy at eBay may also move away from
measuring its business in gross merchandise volume to total payment
value (TPV). But currently of the total volume of sales, only 0.2
to 5 percent flow through PayPal each quarter.
eBay has in recent months identified and
pushed for a greater share in online payments, as currently, though
growth has been healthy, its actual share in the payments market
stands at 12 percent in the US and even lower in Europe.
It is eyeing the prospect of channelling a
greater share of online charitable giving, working with governments
by providing them with a channel for receiving payments of fines
like parking penalties, and consumers’ utility bill or rent
payments.
“There is probably a trillion dollars worth of
TPV we can go after, which is not related to retail or purchase of
goods,” said Stephenson.
Analysts who are bullish about eBay are in a
minority, but believe that PayPal could unlock a great deal of
potential by partnering with internet search engine Google, and
together leveraging the massive amount of data on consumer online
shopping, which is tremendously useful in terms of ad-targeting – a
huge source of revenue.
The company is also going full steam ahead
towards the mobile market and making payment facilities available
to millions of lower-end phones that do not have internet access by
linking them with its PayPal prepaid cards.
