PayPal Expanding Aggressively on International Markets, Focus on Cross-border Transactions and Mobile Payments

by Terry X Xie 0

It should not be surprising at all thatPayPal is a global company providing online payment services acrossmany countries in addition to the U.S. But recently the company hasappeared to be more active than usual in the internationalmarkets.

Here are press releases and news reports from this week aboutPayPal in overseas markets:

• April 14, 2011 — PayPal, the global leader in online and mobilepayments, today announced its strategic cooperation ininternational m-commerce with DHgate, a leading online marketplacein China. DHgate’s mobile shopping website (http://m.dhgate.com ) incorporatesPayPal’s Mobile Express Checkout solution to allow more than 94million active PayPal users in 190 markets to purchase over threemillion Chinese wholesale products across 4,000 categories anytime,anywhere from their smartphones and mobile devices in as little astwo clicks and without the need to enter in their credit cardinformation on a small screen (PRNewswire-Asia).

• April 14, 2011 — PayPal, the electronic payments filial ofeBay, is tailoring its mobile services payment system and base iton SMS, as a way to penetrate the market. PayPal has set a footholdin the local market in 2010 and won 2,5mil users, most high incomeconsumers that purchase products abroad via Internet retailers. Theadaptation of the technology needs a partnership with a localoperator and negotiations are underway with Vivo. John Danohe, CEOeBay, says the model, if successful can be replicated in India orChina.

• April 11, 2011 — Voyager Inc. and PayPal Japan are pleased toannounce that Voyager’s e-book online shopping mall “VOYAGER STORE”(http://voyager-store.com )will add PayPal(TM), the leading online payments provider, as analternative payment option to reach 94 million active PayPalaccounts worldwide shopping online and on their mobile devices.Payment via PayPal will become available from April 11, 2011.VOYAGER STORE was launched in November 2010 as an online shoppingmall specializing in e-books (PRNewswire-Asia).

• April 11, 2011 — The world’s largest debit payment systemPayPal is conducting consultations with Russian Big 3 mobileoperators, RBC daily writes on Monday quoting sources. According tothem, the company is waiting for the adoption of a law on thenational payment system and could open an office in Russia in thenext 12-18 months. One of the sources notes that PayPal, however,refused to team up with any of the running payment systems andseeks other ways to enter the market. Including the companyexplores the possibility of making independent arrangements withdomestic online stores. “Generally, the system is interested notonly in Russia, but in the CIS,” a source adds ( SKRINNewswire).

• April 7, 2011 — PayPal Inc., one of the world’s leading paymentsolution providers, has decided to set foot in Chongqing, one ofthe four municipalities in China, for a push into the populoussouthwestern market. PayPal pushed forward the planned expansioninto Chongqing in cooperation with the local government aftersigning a memorandum of understanding (MOU) earlier this March fora footing in the southwestern Chinese city. Under the MOU, PayPalis expected to make a presence in the prosperous Yuzhong districtof the city, according to a government official, noting that apresence in the central business district (CBD) will make it easierfor PayPal to provide services for its partners in the city(SinoCast).

It appears that there are main themes in PayPal’s recent globalexpansion: cross-border e-commerce and mobile payments.

Cross-border transactions are tough, especially when an emergingmarket is involved, regardless of whether the transactions areinitiated from within or outside. Using credit and debit cardsonline is too risky for many buyers in developed markets such asU.S. and UK, and it is even more so in emerging markets whereonline fraud is much more common. PayPal comes in handy with itsbuyer protection which is typically much more user-friendly thandealing with card issuers and merchants. At the same time, PayPal’s94 million active users (along with the broad acceptance amongonline merchants worldwide) have become its key negotiation powerin entering some markets such as China. In February, PayPalannounced a partnership with China UnionPay to will allow CUPcardholders in China to make payments to the U.S. and Europe laterthis year.

And mobile is quickly growing on the international markets,especially those in Asia-Pac and Europe. Even though mobiletransactions still only account for a very small percentage of alltransactions PayPal handles, this area has been growing fast. Andbeing able to offer mobile payment options has also become abusiness requirement for online payment service providers in somemarkets.

The International market is especially important to PayPal as itsees slower growth in the U.S. market. Another strategic area wherePayPal is seeking to grow is the offline market, i.e. paymenttransactions at POS. It is well known that PayPal is a powerful andresourceful company, just keep in mind that it is also an ambitiousone too.