Regular readers of this column will have noted that there are three
companies whose names keep cropping up: Amazon, Google and
eBay.
Despite its failure to make a profit, Amazon is of note for its
continuing innovation in the e-commerce sphere. Google manages to
combine a useful and free service with a healthy bottom line.
Perhaps most impressively of all, eBay is profitable and almost as
innovative as Amazon.
In many ways, eBay's latest move could be its most important. For
with the
acquisition of e-payment company
PayPal, eBay may be
poised to become the pivotal e-commerce player - one upon which
millions of other businesses could one day depend.
I wrote about PayPal nearly two years ago, when it was just one of
several we-commerce systems - simple ways for end-users to send
money to each other, where the actual money transfer between
accounts was handled by services such as PayPal.
Since then, the company has expanded mightily. From four million
users back in 2000, PayPal now has some 16 million users - an
impressive figure that underlines its complete dominance of this
sector, trumping even eBay's own Billpoint payment system.
For background on PayPal, there are some good
help
pages with explanations of how the system works.
Both the sender and the recipient of funds need to have a PayPal
account, of which there are three kinds: personal,
premier and business. The first of these can send and receive
payments
free of charge but cannot accept credit card payments.
The
other two can, making them attractive for business use.
The downside is that there are
a range of fees.
As the list of
withdrawal fees indicates, PayPal supports
many countries. A FAQ explains how
international transfers work.
The other notable change at PayPal over the past few years has been
a major new emphasis on business. A comparative
table of costs shows why PayPal has caught on with some
30,000
smaller
online companies as an online payment method, and there are
now many
resources devoted to such shops, as well as a PayPal
developer network.
PayPal also has something called
Billpay, which can be used for paying bills using PayPal
funds. This indicates where PayPal is heading, as it turns from a
simple form of e-mailed money to a comprehensive global online
payments system.
It was clearly this that attracted eBay. Although about 60% of
PayPal's business already comes from eBay, the other 40% comes from
small merchants that have nothing to do with the company. Acquiring
PayPal will allow eBay to become a general financial intermediary,
rather than just a facilitator for auctions.
In other words, combined with the clout of eBay, the PayPal system
could become the long-heralded universal e-cash system. Indeed, if
eBay succeeds in assuaging the fears of other companies that it
will become too powerful in the online world, it does not seem out
of the question that ultimately eBay will become a payment company
first and foremost - ePay, perhaps?