PayPal going mobile to extend its services

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Posted: Saturday, March 30, 2013 12:00 am

PayPal, employer of about 2,500 people in the Omaha area, said it plans to double annual payments processing to $290 billion by 2015.

“We lost sight of our customers in the past,” said PayPal President David Marcus, speaking at an EBay analyst conference late last week. “We need to get people to love us, not just like us.”

The digital payments company, owned by San Jose, Calif.-based EBay Inc., is attempting to appeal to mobile-phone users and to accustom people to using the system to pay for goods and services even while physically present at a merchant, Marcus said.

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PayPal developed mostly as a payment method for people doing businesses on EBay, the worldwide auction and shopping site, before branching into more comprehensive payment services for buyers and sellers. The company has computer and financal systems that allow buyers and sellers to exchange money without meeting.

The company is a big deal in Omaha. PayPal’s main operations center is in La Vista, from where it handles worldwide payments processing and account maintenance. PayPal is the second-largest contributor to EBay’s revenue and profit, after the segment that includes the main auction and shopping site. PayPal started doing business in La Vista in 2000, according to an article on the company’s website, and employed about 3,000 people in 2010.

PayPal had 2012 operating income of $1.4 billion, on sales of $5.6 billion. Overall, EBay had net income of $2.6 billion last year. Shares of EBay closed Thursday at $54.22 and are up about 47 percent in the past year.

Marcus told Wall Street analysts gathered at the company’s headquarters that PayPal has 125 million active users. Users typically set up a PayPal account using a credit card, debit card or bank account. That establishes a “digital wallet” that allows users to pay for purchases on participating Internet shopping sites using the PayPal account.

PayPal transactions exchange no customer or account information with sellers, which pay the company a small fee per transaction.

Now, Marcus told analysts, the company wants to handle more payments. Initiatives include enabling PayPal accounts to order ahead at restaurants and movie theaters, to pay at parking meters and receive alerts when minutes are low, and to handle similar day-to-day tasks requiring payments.

Marcus said PayPal can collect perks such as shopper reward and loyalty points within the digital wallet, and retailers can use their connection to PayPal to track customer preferences. Payment in person at a store or restaurant would happen via a card linked to the PayPal account, or by using a smartphone and a personal identification number.

PayPal also said during the analyst conference that all of the company’s new offerings are designed to work on mobile devices such as smartphones and tablet computers, which he called commonplace shopping tools. Young people coming of shopping age soon, he said, will consider using a mobile phone for purchases as ordinary as using it for calls or text messages.

“Consumers are no longer constrained by time and place. They do it wherever and whenever they want to, even when the store they like is closed,” said Don Kingsborough, a PayPal vice president who spoke at the conference.

“It is no longer about location, location, location.”

Contact the writer: 402-444-3133, russell.hubbard@owh.com

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