We've just posted some reflections on PayPal's new Buyer Credit offering which was introduced recently in partnership with GE Capital Consumer Card Company.
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Great piece!
You mention that the reason the bank's PayPal clones failed was a lack of investment. I agree that that was a key part of it. In addition, they were betting on their brand names and trust theorectically inherent in those names to overcome less attractive pricing and technology. It is possible that what PayPal has proven, even without eBay behind them, was that consumers will look past any concerns they have about security if there is a Beanie Baby that they must have. In other words, that comfort associated with the old brands is fleeting. This is no different than what is going on in the airline business; fly United for $1800 or JetBlue for $400. If people are willing to put their lives at risk to save $1400, why not their banking info?
Posted by: Steve Klebe | June 18, 2004 at 10:47 AM
Steve,
Thanks for your comments.
Your airline analogy is a great one. One of my partners recently flew JetBlue (he's a regular) and the JetBlue CEO got on the flight and served drinks the whole way out. That's also a different level of dedication that you find among the "big guys"!
Given the choices auction buyers had of standing in line for a money order at their local Post Office, going into their bank for a certified/cashiers check or signing up for PayPal and getting a bonus to boot, most demonstrated their native intelligence!
PayPal also had its share of customer service issues in the early days with both buyers and sellers. I suspect they'd say one of the keys to success involved getting that to work right as well.
Scott
Posted by: Scott Loftesness | June 18, 2004 at 03:34 PM
Three years ago I saw clearly that the internet gave us the opportunity to undo the banks and the credit card networks. I often wondered why my e-commerce-biz buddies kept thinking solely about issuing visa-branded cards, when there was every opportunity to issue your own cards. Visa was able to do what it did because it brought merchants, customers and banks together on a single network. Their innovation was the use of a closed network to do transactions in real time: they offered instaneity, interconnectivity and reach. Now the Internet offers the same opportunities for anyone like a PayPal to do the same - at a much lower cost and on a much grander scale!!!
Posted by: John Mencias | September 13, 2004 at 03:11 PM
Excellent article! All I can say is "fasten your seat belts ladies and gentlemen" as you have not seen nothing yet... Call me in 5 years so we can reflect back on the year that changed the payment processing landscape...
Posted by: Kevin Gallagher | December 01, 2004 at 06:30 PM
Great information here. Just what I needed to complete my essay.
Thanks. In my opinion the internet is the key to success!
Posted by: Maxine | June 10, 2005 at 02:47 AM