Case Study: Paypal

Case Study: Paypal Merchant Services

Background: About networking

In April 2006, PayPal is closely monitoring the launch of Google’s online payment service. Google has offered a limited trial of its payment service alongside its beta test of Google Base (a searchable service that hosted used posted listings for items such as products, apartments, jobs and auto). This GB will provide ease for Google buyers to pay using their credit cards and for sellers to process payments since this is free to buyers and inexpensive for sellers compare to other options.

Google’s payment initiative is a potentially serious threat to PayPal since it directly competes with PayPal’s market. PayPal allowed any individual or business with an email address and credit card/bank account to send or receive payments online.

2004 2005

Revenue $0.53B $1B

%age 100% 147%

Payment Processed $18B $27B

Growth strategies/plans:

1. International expansion

2. New product launches

3. Forging strategic partnerships

4. Recruitment of large accounts (i.e. Dell, Sharper Image, etc.)

Strengths:

1. Account is simple and takes less than 5 minutes to set-up.

2. Ease in transaction for co-PayPal account users.

3. Preferred by individuals or small businesses that were unable to accept credit card payments from consumers.

4. Quicker and more convenient payment method.

5. Appeals to auction buyers due to its ease of use and privacy protection re back account info.

6. Aggressive marketing by giving out incentives for referrals and new user account applications ($10 per) in their PayPal account.

7. Dislodged eBay’s online payment service called Billpoint and other early entry competition.

Weaknesses/Challenges:

1. User growth overwhelmed its infrastructure, the company weathered website crashes and 100K email backlogs in customer service.

2. Government (States) scrutinized PayPal’s business to determine whether it was an...