PayPal Tries to Solidify Market Position As Competitors Ready

Yesterday's Facebook developer conference didn't yield a payments announcement.) It's still a logical move for the company to make.) However it did see the introduction of a new logo/identity and the launch of a new branding campaign for payments incumbent PayPal.

PayPal is probably still the growth engine among a range of decent-performing but somewhat lackluster businesses at eBay. Here's the data from the Q1 earnings release:

PayPal net total payment volume grew 27% with Merchant Services volume up 32% and on-eBay volume up 15%. Revenue grew to $1.8 billion. PayPal gained 5.8 million new active registered accounts to end the quarter at 148 million, up 16%. Global on-eBay penetration increased to 78.9%. PayPal continued to invest in its credit offerings, providing flexibility for consumers and merchants while improving its ability to manage transaction expense and reinvest in the business to accelerate growth.

PayPal may soon face a range of mobile payments competitors in Facebook, Amazon and Apple. Google failed to vanquish the online payments incumbent with Google Wallet but it bet on the wrong strategy (NFC). The PayPal brand is not as strong as some think (perhaps even the company itself). It has name recognition but relatively weak brand affinity among consumers. 

There are some surveys that suggest PayPal is a highly trusted consumer brand and in a stronger position vis-a-vis its rivals and potential rivals. I belive that's mostly about name recognition and not actually about trust. I also think that PayPal (on the consumer side) is extremely vulnerable to "disruption" should a well-designed Apple or Amazon (or potentially Facebook) payments product come along. 

Below are the installed user-base numbers for the three companies: 

  • PayPal: 150 million approx
  • Apple: 600 million
  • Amazon: 240 million approx 

Against that backdrop PayPal introduced a new brand identity and is launching a global branding campaign featuring TV and online-video. The theme of the ad below is simplicity and convenience. 

The campaign and global push may well shore up PayPal's position by making it the most familiar non-bank/credit card associated with payments. Indeed, there's an opportunity for PayPal to more firmly establish itself as the online and mobile payments product of choice.

It will still need to improve the user experience (e.g., stop defaulting to user bank accounts as the primary payment method), crack down on PayPal related fraud and phishing (if it can) and be generally more consumer-centric and service oriented rather than simply an alternative way to pay to avoid filling out a form.