The volume of payments made via PayPal from mobile devices will total more than $3.5 billion in 2011, with the company expecting a significant jump in mobile payments during the upcoming holiday shopping season.
PayPal’s mobile payments volume predictions for 2011 have grown throughout the year, starting at $2 billion in the beginning of the year and jumping to $3 billion a few months ago. Earlier this week, eBay CEO John Donahoe upped the number again during a discussion on stage at the Web 2.0 Summit, saying he expects the total to now reach $3.5 billion by the end of the year.
“Mobile is exploding,” said Anuj Nayar director of communications for PayPal, San Jose, CA.
“We are seeing a massive growth in mobile payment volume,” he said.
“We think the numbers for mobile payments are going to be huge for this holiday season.”
Rapid growth
EBay reported financial results on Wednesday for the third quarter ended Sept. 30, 2011.
The company said that revenue for the quarter increased 32 percent for a total of $3 billion. EBay also reported net income of $490.5 million, or $0.48 per diluted share.
The company pointed to the growing role that mobile plays as online and offline shopping blend into a single commerce environment in the results. EBay is focused on enabling commerce anytime and anywhere.
PayPal’s overall payment volume grew 31 percent in the third quarter for a total of $29.3 billion.
The Marketplaces business saw overall merchandise volume increase by 16 percent year over year for a total of $14.7 billion.
EBay now expects the volume of merchandise sold by eBay via mobile devices to reach $5 billion this year. Earlier this year, eBay had put the number at $4 billion.
Downloads for eBay’s mobile applications have surpassed 50 million globally.
Mobile shopping is different
By 2013, PayPal expects mobile payment volume via PayPal to total $7.5 billion, per Mr. Nayar.
“Mobile is a small proportion of what eBay expects to do overall as a company but a rapidly growing part of that,” Mr. Nayar said.
Initially, eBay had expected mobile payments would cannibalize online shopping. However, this is not proving to be the case.
“What we are seeing is that mobile is additive to the online site,” Mr. Nayar said.
“People shop in very different manners from mobile,” he said.
Mr. Nayar points to how shoppers use mobile around Thanksgiving as an example of how mobile shopping is different.
Much of the shopping around the Thanksgiving holiday has traditionally taken place the day after Thanksgiving when consumers go the malls to look for special offers and on the following Monday, when they are back at work and are looking for online deals.
However, PayPal says mobile is changing this as a growing number of consumers shop from their mobile devices on Thanksgiving Day.
“We are seeing a whole new paradigm with consumers sitting on the sofa after lunch watching football and shopping via their mobile phones,” Mr. Nayar said.
PayPal has been enhancing its mobile payments offerings in recent months, including rolling out a one-stop shop for merchants to engage their customers directly during every part of the shopping cycle (see story).
EBay also recently acquired mobile payments provider Zong to enable carrier billing (see story).
“There is explosive growth in the way that people do everything via mobile and embrace for all sorts of activities,” Mr. Nayar said. “Clearly, people are embracing shopping as one of the key ways they use mobile.”