PayPal goes mobile to draw customers, fend off competitors

SEATTLE — PayPal keeps adding new customers and merchants despite an onslaught of competition from credit-card issuers, start-ups and smartphone makers looking for a piece of the fast-growing digital payments market.

CEO Dan Schulman said the company’s one-touch mobile payments feature, which lets shoppers complete transactions on smartphones with the push of a button, is the key attraction.

The performance on mobile helped PayPal post first-quarter sales and profit on Wednesday that were higher than projected.

More than 21 million customers of PayPal’s 184 million account holders are using the feature that was introduced last year, which Mr Schulman said indicates customers like the product and more will embrace it.

“This is the most rapidly-adopted service in PayPal’s history,” said Mr Schulman, who took over as CEO in July, when PayPal split from its parent company eBay. “We have a lot more potential with this service.”

Mr Schulman wants to transform the company from a payment button on a website into a versatile financial tool that lets users pay merchants, send money to friends and discover nearby dining and shopping options through smartphone apps.

He hopes adding new functions will make PayPal users more engaged with the platform on mobile devices and less likely to defect to payment options from Apple, Visa and Samsung.

Transaction Volume

PayPal handled US$81.1 billion (S$108.9 billion) in transactions in the first quarter, an increase of 31 per cent from a year earlier, and a key metric to gauge growth.

The company added 4.5 million new customer accounts and now has 14 million merchants taking payments through the platform.

Profit, excluding certain items, was 37 cents a share on revenue of US$2.54 billion in the quarter, said California-based PayPal in a statement on Wednesday.

Analysts on average projected earnings of 35 cents and sales of US$2.50 billion, according to data compiled by Bloomberg. Revenue was US$2.14 billion in the period a year earlier.

PayPal’s payments on mobile devices are helping the company stand out as shoppers shift their spending from desktop computers to smartphones, said Mr Josh Olson, an analyst at Edward Jones & Co.

Spending on mobile devices in the United States is expected to increase 39 per cent this year to more than US$123 billion, according to eMarketer. BLOOMBERG