Driving Incremental Internet Sales
IEA & Marketforce: The Power of Payments
London, July 3rd 2008
Confidential and Proprietary

Agenda
• PayPal introduction
• Addressing the three biggest problems in e-commerce payments
• The merchant benefit: incremental sales
Confidential and Proprietary 2

PayPal overview
Founded 1998 and acquired by eBay 2002
Facilitates online payment by card, bank, and balance
Operates in EU under a Luxembourg bank license
$47B total payment volume (33% growth) in 2007
190 markets & 44% of revenue from outside U.S.
Millions of
#1 EU and UK financial website (Nielsen) PayPal user
175 accounts
120,000+ European merchant websites 57M accounts
133 active during
50M+ European accounts 2007
~10% of global e-commerce 96
64
40
23
12
5
2000 2001 2002 2003 2004 2005 2006 2007
Confidential and Proprietary 3

Agenda
• PayPal introduction
• Addressing the three biggest problems in e-commerce payments
• The merchant benefit: incremental sales
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The three biggest online payment problems
50%
don’t
complete
Checkout
abandonment
40%
very
concerned
Concern about
privacy, security,
and safety 24%
seek
alternatives
Choice of all
preferred payment
methods
Sources: Shop.org/Forrester, 2007; Forrester, 2007; Jupiter/PayPal, 2008
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Problem #1: checkout abandonment
Checkout abandonment Need for easier checkout
100%
90%
80%
• 31% of shoppers prefer to shop at
70%
stores that don’t require them to retype
60%
50%
their name, address, and card number.
52% 51% 50%
40% 46%
30%
• 48% of shoppers prefer using
20% alternative payments because they are
10% more convenient.
0%
Web-based Store-based Catalog-based Average
Source: Shop.org/Forrester, State of Online Retailing 2007 Source: JupiterResearch/PayPal, “Confidence, Convenience, Choice”, 2008
Enter Enter Enter Enter Enter
name and Add
Merchant buyer delivery card card Confirm Process 50%
Checkout personal shipping
address address number & security basket payment
info costs conversion
data data date data
Login to Review 80%
PayPal payment conversion
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Problem #2: concern about privacy, security, and safety
Online shopping privacy concern
100%
90%
80% 12% of European
70% adults (21% of
60% internet users) avoid
62% 61% shopping online due to
50%
40% security concerns.
44% 40% 40%
30% Source: Eurostat,
20%
Feb 2008
10% 17%
0%
UK FR ES Average IT DE
Source: Forrester, Security Concerns Impact European Online
Behavior, July 2007; % shoppers rating themselves (very) concerned
Payment accounts protect financial info
“I like the security that
PayPal offers. I don’t
like giving my card
details out directly to
any company.”
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Problem #3: choice of preferred payment methods
Cards:
Payment Bank: US,CA,UK,DE(EFT,ELV,giropay),FR,ES,NL,CH,AU
Methods Balance: 65 countries
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Agenda
• PayPal introduction
• Addressing the three biggest problems in e-commerce payments
• The merchant benefit: incremental sales
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1-5% incremental sales for the largest merchants;
5-25% incremental sales for medium-sized merchants*
Methodology: Over a two-week period, 100% of PayPal buyers from leading European websites were asked,
“Would you have made your purchase from [this merchant] if PayPal had not been offered as a payment option?”
% that would PayPal’s %
not have x share of = Incremental
bought without merchant’s sales
PayPal sales
UK large retailers 25% 10% 2.5%
24% 12% 2.8%
Boots, eBuyer, Envisage, 14% 22% 3.1%
Expansys, Photobox, SVP 25% 14% 3.5%
23% 15% 3.5%
66% 7% 4.6%
France/Italy/Germany retailers 21% 2% 0.4%
19% 5% 1.0%
France – Aquarelle, 30% 3% 1.0%
BrandAlley, Cdiscount, Fnac, 18% 8% 1.4%
Meetic, Pixmania 30% 5% 1.5%
32% 6% 1.9%
Germany - Blume2000, 22% 10% 2.2%
Buch.de, Computer Universe 36% 7% 2.4%
57% 5% 2.8%
Italy - Mr. Price, 3, Yoox 42% 8% 3.4%
27% 20% 5.4%
28% 30% 8.4%
* Sources: comScore (14% US SMB), IZH4 study (7-13% Germany), PayPal consumer and merchant surveys
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Drivers of incremental sales from PayPal
%
Privacy – not sharing info 27
Trust PayPal/PayPal is 11
reliable
Safety 42% PayPal Buyer Protection 4
%
Convenience 30% No need to retype details 24
Just a few clicks 5
Keep track of payments 1
Payment Methods 17% %
Wanted to use PayPal balance 7
Don’t have credit card 4
Loyalty 7% Couldn’t use preferred card 3
Wanted to use bank account 2
Cross border payment 1
Other 4%
0% 20% 40% 60%
All Respondents
(474)
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Merchants of all sizes adopting PayPal
120,000+ active
web merchants
15 of top 50
10 of top 50
15 of top 50
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Thank you!!!
cscheible@paypal.com
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