eBay hustles to secure e-payment dominance
eBay company PayPal is modifying its company structure and strategy in Europe to ensure market dominance in the online payment sector. The electronic payment service is relocating from the United Kingdom to Luxembourg, where it is slated to open a bank this summer to finance online purchases.
PayPal is said to be rushing to expand services to prevent Google Checkout and other competitors from making inroads into an area it has traditionally dominated. It also wants to put an end to confusion in Europe over the services it offers to quickly increase clientele. Although PayPal has been successful in acting as an intermediary in online purchases in the United States, according to executives, the company has faced challenges when trying to sell this service in Europe.
“Many business owners and public officials have asked us ‘Why don’t you become a bank and make our lives easier?’” PayPal Europe CEO Brent Bellm, told Spanish newspaper El Pais during a recent interview.
And that’s what the company has done. Luxembourg’s Commission de Surveillance du Secteur Financier (CSSF) has granted a banking license to limited partnership PayPal Europe S.ar.l. et Cie S.C.A., effective July 2, 2007. “We aspire to see PayPal accepted on virtually every retail website in Europe,” Bellm says when describing immediate plans. The CSSF, meanwhile, will regulate the firm’s banking activities.
In Europe, PayPal has more than 35 million accounts and it’s available in more than 100,000 websites, including Harrods, DHL, Meetic, Tommy Hilfiger, Boots and parent company eBay. In 2006, it processed more than $8.4 billion of total payment volume. PayPal controls about 30% of the United Kingdom market and about a quarter in the rest of Europe. It has local language sites in 10 European countries and supports payment in nine European currencies. Predominantly available at small retailers, PayPal now intends to focus on becoming available at larger European outlets.
As an intermediary, PayPal collects the financial data of the individuals and businesses that open PayPal accounts and uses the information to execute online payments. It does not share the data with online merchants. Fees are charged for the receipt of payments and for multiple currency transactions. It will now finance purchases online.