PayPal shows strength, but competitors loom


Visitors walk past an eBay and PayPal banner at the Mobile World Congress in Barcelona in this February 28, 2012, file photo. (ALBERT GEA/REUTERS)
October 17, 2013

Times are good for online payments, with PayPal reporting a 12 percent jump in revenue in the last quarter, even as parent company eBay reported a lower-than-expected future outlook, including the holiday season.

On an earnings call, eBay chief executive John Donahoe said that PayPal users were up 17 percent in the past quarter and that the service now weighs in at 137 million users. And 32 percent of those users are coming in through mobile devices.

Things are good for PayPal right now, but eBay is far from the only one trying to work out the future of mobile payments, and it’s facing competition from just about every side. The business of controlling online identity -- particularly in the payment world -- is becoming an increasingly attractive one to tech titans and payment processors alike.

Managing passwords is one of the biggest hassles for consumers in the digital age, particularly when it involves remembering dozens of credentials for different accounts. Solving that problem securely is big business, and one reason why companies such as Google, Facebook and Twitter are happy to let folks use sign-in credentials for their networks on other sites. And when companies can hook payment processing into that equation, it makes their networks even stronger -- hence one reason why PayPal continues to work on becoming a payment option across the Web.

But new competitors pop up every day. Most recently, Amazon stepped into the ring, announcing a new program, “Login and Pay,” that allows users to do just that by using their Amazon accounts to let the tech titan process and authorize payments.

“Given the size of Amazon and the trust they’ve built up as a brand over all these years, for social login over all, this is a positive for all involved,” said Bill Piwonka, vice president of marketing for the social log-in firm Janrain. Janrain works with several companies, including Amazon, to deploy social login services.

Based on its reputation, Piwonka said that he thinks Amazon will see long-term success in the space as it signs up more stores to use its service.

Patrick Salyer, the chief executive of the social login company Gigya , said that while other firms such as Google have already launched their own payment services tied to social log-in, Amazon’s program poses the biggest competition for PayPal, because the company has a wide reach and an established past as a retailers.

Scale, he said, is the firm’s greatest advantage. “Over 200 million consumers that use product on a regular basis,” he said.

Salyer, whose firm works with companies including ABC and Barnes and Noble, also said that he expects the worlds of identity authentication and payment processing to move closer together in the future, particularly as more payments are processed on mobile devices, which have smaller screens and make the annoying process of logging in even more frustrating.

He also said that he expects that companies providing social login services will find their services deployed in brick-and-mortar stores down the line, because the process can be fairly seamless.

Mobile apps that have your payment information stored in them — such as Amazon’s, he said — let you make purchases with a single tap. “The ability to take that to other apps will be very, very appealing to retailers,” he said.

Piwonka did note, however, that if consumers aren’t comfortable with letting login providers have information about the other Web sites they visit, that most services still offer the option to create accounts with separate usernames and passwords.

“If you are concerned that doohickey.com or brand.com is going to misuse your data, if you have that concern, then you don’t have to use your Amazon, Facebook or Google account,” he said. “That’s a different usage model than social login.”

(Amazon chief executive Jeffrey Bezos owns The Washington Post.)

Hayley Tsukayama covers consumer technology for The Washington Post.
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