According to Business Week, PayPal will not have any significant competition after November 22.
E-Bank Notes
PayPal Looks Like eBay's Best Bud
On Nov 22, eBay subsidiary PayPal will be left with a near monopoly on the $8.2 billions e-auction payments market. That's when PayDirect, a joing venture of Yahoo and HSBC Holdings, will close its doors. A similar service from Citigroup folded last year. Analysts don't see much of a threat from the few remaining players. "Just about every vendor of significance in this market has left," says Penny Gillespie, an analyst at Forrester Research.
That leaves parent eBay, which bought PayPal in 2002 for $1.5 billion, sitting pretty. PayPal is used in 66% of all consumer online auction transactions, says Jupiter Research, which sees the business growing 45%, to $11.9 billion in transactions by 2009. PayPal, which collects fees from sellers, charges 30 cents per transaction plus 1.9% to 2.9% of the proceeds. Buyers don't pay anything. In the third quarter, the subsidiary's revenues rose 56%, to $166 million, accounting for 21% of eBay's total sales.
A top priority for eBay CEO Meg Whitman is expanding PayPal beyond online auctions. On Oct. 25, PayPal began offering its services to Napster's digital music customers. And it's broadening its global reach. PayPal currently offered in eight countries, will launch in more places in Europe in 2005
---Olga Kharif |
