Published on

Published in: Economy & Finance, Technology
1 Comment
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide
  • Paypal

    1. 1. Creating a new global standard for online payments 10/07/04
    2. 2. PayPal overview <ul><li>50M user accounts </li></ul><ul><li>5 currencies, 45 countries </li></ul><ul><li>Alternative funding options for buyers who don’t own credit cards or prefer not to use them: </li></ul><ul><ul><li>Bank account transfer </li></ul></ul><ul><ul><li>eCheck </li></ul></ul><ul><ul><li>Stored balance </li></ul></ul><ul><ul><li>Buyer Credit </li></ul></ul>PayPal Member Account Growth through Q2 ‘04 A growing community of users
    3. 3. eBay is a premier growth company … (Real $M) GMV 1 5 10 15 20 25 30 35 40 Years from incorporation Note: Sales and GMV adjusted to reflect 2003 dollars. Source: eBay; US Department of commerce; Bureau of Economic Analysis; BCG analysis.
    4. 4. … and so is PayPal! GMV 1 5 10 15 20 25 30 35 40 Years from incorporation (Real $M) Note: Sales and GMV adjusted to reflect 2003 dollars. Source: eBay; US Department of commerce; Bureau of Economic Analysis; BCG analysis. TPV
    5. 5. How PayPal works Senders Visa/MC, Amex, Discover Bank Account Debit Card (e.g., Switch-Solo in UK) Stored Value Account Bank Account PayPal Debit MasterCard Paper Check Another PayPal account Stored Value Account Receivers eCheck
    6. 6. Why PayPal works for buyers <ul><li>Free to use </li></ul><ul><li>Pay anyone with a credit card or bank account: “online wallet” </li></ul><ul><li>Fast, secure payment – 1 week -> 1 minute </li></ul><ul><li>Stores financial information securely to maintains user privacy </li></ul><ul><li>Works cross-border </li></ul>eCommerce P2P/remittances Importance PP competitiveness Cost Convenience Rewards/loyalty points Security Network
    7. 7. Why PayPal works for sellers <ul><li>Enables credit card acceptance </li></ul><ul><li>Faster payment = faster inventory turn </li></ul><ul><li>Easy to sign up </li></ul><ul><li>No setup, monthly or gateway fees </li></ul><ul><li>Competitive price with no minimum time commitment </li></ul><ul><li>Fraud protection – 25 bp vs. 110 bp </li></ul>
    8. 8. Complementary missions The world’s online marketplace The world’s online payments standard Powering Online Commerce
    9. 9. Symbiotic relationship with eBay <ul><li>Increases velocity of trade </li></ul><ul><li>Enhances trust & safety </li></ul><ul><li>Enables innovation </li></ul><ul><li>Provides the aggregation point for small business </li></ul><ul><li>Drives critical mass of buyers & sellers </li></ul><ul><li>Solved counter-party problem </li></ul>
    10. 10. Impact to eBay marketplace PayPal integration Year-over-year US transaction revenue growth Note: 2001 data reflects growth rates in total US revenues, not just “transaction revenues.” Transaction revenues have constituted over 95% of total US revenues from 2002 through Q2, 2004.
    11. 11. PayPal enables global trade Can be used in 45 countries PayPal available PayPal available + Local Bank Acct. Withdrawal Currencies Supported: US $, CA $, GBP £, Euro €, JP Yen ¥ Localized: US, UK, DE, FR, BE, CH, NL, AT
    12. 12. A Global Destiny <ul><li>Milestones </li></ul><ul><ul><li>Multi-currency support in November 2002 </li></ul></ul><ul><ul><li>UK site: September 2003 </li></ul></ul><ul><ul><li>DE site: July 2004 </li></ul></ul><ul><ul><li>FR site: August 2003 </li></ul></ul><ul><li>PayPal will continue to support eBay in key geographies where eBay is strong and payments solutions are required </li></ul>
    13. 13. Can banks profit from “remittances”? <ul><li>Yes, but… </li></ul><ul><li>Market competition is fierce </li></ul><ul><ul><li>MTOs have 90% of the “official” market (Western Union, MoneyGram) </li></ul></ul><ul><ul><li>MTOs have robust physical distribution, low access barriers, real time funds transfer </li></ul></ul><ul><ul><li>Internet P2P players (e.g., Yahoo PayDirect) </li></ul></ul><ul><li>Need to overcome the “the first mile problem” </li></ul><ul><ul><li>Establish profitability to serve customers </li></ul></ul><ul><ul><li>Customer-friendly interface </li></ul></ul><ul><ul><li>Customer acquisition </li></ul></ul><ul><ul><li>No real time funds transfer between institutions </li></ul></ul><ul><ul><li>Legal/Regulatory barriers – USA Patriot Act, card associations, NACHA </li></ul></ul><ul><li>Need to overcome the “the last mile problem” </li></ul><ul><ul><li>Receivers are largely “unbanked,” exhibit low financial literacy </li></ul></ul><ul><ul><li>Local bank networks (branches and ATMs) still in development </li></ul></ul><ul><ul><li>FATF </li></ul></ul>
    14. 14. Possible market strategies <ul><li>Banks </li></ul><ul><ul><li>Learn from past experiences – C2it, from Citibank </li></ul></ul><ul><ul><li>Acquire user base – lower barriers to access </li></ul></ul><ul><ul><li>Offer a compelling product </li></ul></ul><ul><ul><li>Compete on price, value </li></ul></ul><ul><li>MTOs </li></ul><ul><ul><li>Business model already works </li></ul></ul><ul><ul><li>Compete on “real time funds transfer” </li></ul></ul><ul><ul><li>Offer a customer-friendly UI, “fast and secure” payment to reach out new customer segments </li></ul></ul><ul><ul><li>Upgrade product line to offer P2P, “delayed payment” offering </li></ul></ul><ul><li>New technologies mean new opportunities </li></ul><ul><ul><li>Leverage ATM networks </li></ul></ul><ul><ul><li>Use the proliferation of the Internet </li></ul></ul>
    15. 15. Partnering for success in remittances <ul><li>PayPal offers </li></ul><ul><li>User network of 50 million, with stored financial information </li></ul><ul><li>Millions of immigrants </li></ul><ul><li>Convenient, “always on” front end in key sender countries: US, UK, DE </li></ul><ul><li>Pricing is 50% less than MTO </li></ul><ul><li>Real time funds availability (instant ACH or credit cards) </li></ul><ul><li>Innovative products </li></ul><ul><li>Trusted payments brand in US </li></ul><ul><li>Secure platform </li></ul><ul><li>Money transmitter license </li></ul><ul><li>Compliant with USA Patriot Act </li></ul><ul><li>International account-to-account transfers </li></ul><ul><li>PayPal needs </li></ul><ul><li>Banked senders and receivers, who are online; OR </li></ul><ul><li>Partner to deliver funds from a user’s PayPal account; OR </li></ul><ul><li>Physical access points for offline or unbanked receivers </li></ul><ul><li>Access to customers in receiver countries </li></ul><ul><li>Sponsorship into the ATM network </li></ul><ul><li>Compliance – OFAC, AML, etc </li></ul><ul><li>Trusted payments brand in receiver countries </li></ul>
    16. 16. Segment share (projected) Source: Financial DNA, June 2002; Celent Communications, August 2002 <ul><li>Card-based transactions will be disruptive to agent-based players like Western Union </li></ul><ul><ul><li>Ubiquity </li></ul></ul><ul><ul><ul><li>30,000 McDonalds </li></ul></ul></ul><ul><ul><ul><li>169,000 Western Union Agents </li></ul></ul></ul><ul><ul><ul><li>1.2 million ATM locations </li></ul></ul></ul><ul><ul><li>Acceptance </li></ul></ul><ul><ul><ul><li>In 2003, there were 2.5 million remittance ATM-card holders in developing world </li></ul></ul></ul><ul><ul><ul><li>By 2006, that could be 13 million </li></ul></ul></ul><ul><li>Revenue opportunity in card-based transactions could exceed $2 billion </li></ul>
    17. 17. Preferred payment methods Source: BIS Red Book
    18. 18. Prioritizing segments for remittances Mexico India <ul><li>Sophistication of bank system </li></ul><ul><ul><li>Financial services coverage </li></ul></ul><ul><ul><li>Trustworthiness of financial institutions </li></ul></ul>EU # Segment size ($ Billions) China LAC CA UK <ul><li>Internet adoption </li></ul><ul><ul><li>Online penetration </li></ul></ul><ul><ul><li>High-speed access </li></ul></ul>High Low Low High Philippines Eastern Europe Middle east
    19. 19. Thank You! Merci Dank ë Cheers! Domo arigato Xie xie Dhanyabad Abhar Gracias Spasibo Grazie Asante Sipas Go raibh maith agaibh Murromboo Komapsumnida Shukriya Tashakkur Achiu Wanìshi Doh je Mahalo Toda Shukran Aman Verjee [email_address] Dickson Chu [email_address]