PayPal may be at the top of the person-to-person online payment heap for now, but an analysis suggests it has one weakness that incoming and prospective competitors - say, those looking to tap into the adult Internet market PayPal is leaving behind - might find easier to exploit than anyone might think: its lack of option and even target diversity.
Never mind that, since a successful initial public offering, they've outlasted or outpaced lots of rivals. Analyst Mark Lavelle, a vice president of business development for I4 Commerce, says his company is ready to reach out to a retail market the other person-to-person payment operators don't think they need: customers who don't carry credit cards or want to shop online without giving away their credit information.
"Our message to retailers is that it's not a zero-sum game where they can only give consumers one option," Lavelle told E-Commerce Times, even as he noted credit cards are used over 95 percent of the time in cyberspace. "We contend that it's because, by and large, people don't have choices. There is a lot of evidence out there that people are still not buying online because of security concerns tied to their credit cards. We think if consumers have more choices, that will mean more sales and more profitability for retailers."
And while it's easy to think of PayPal as the Goliath of person-to-person online payments, PayPal also has another wounding flaw which might mean some David's slingshot could hurt down the road apiece: eBay. The online auction kings may have bought PayPal right after the latter's IPO, but eBay right now accounts for over half of PayPal's business.
Another analyst, IDC's Aaron McPherson, tells E-Commerce Times PayPal might ponder foreign currency exchange and money-wiring servicing as ways to diversify, since it would build on a platform they've established and have made trusted. McPherson also says whether other payment option players can come in and become as dominant as PayPal has been - even granted the eBay factor - is still an open question.
