Case Study An E-Business Perspective

agenda

INTRODUCTIONINTRODUCTION

Background

History

• The company, originally called Field Link, was founded by Max Levchin, an online security specialist, and Peter Thiel, a hedge fund manager in 1998. Levchin and Thiel joined forces, received $3 million in funding from the Nokia Corporation for this venture.

• Launched PayPal in October of 1999 with six employees.

• Between January and August 2000, PayPal surged from 12,000 accounts to 2.7 million.

• June 2000, PayPal introduced accounts for businesses. By the end of 2001, more than one-fifth of PayPal's 12.8 million accounts were business accounts.

• In 2002 PayPal purchased by eBay, the operator of its main competitor, Billpoint for $1.5 billion in eBay stock, which gave eBay more control, and increased the profit made from each transaction from 7 to 10 percent.

Ways to use PayPal

Pay OnlinePay Online

Shop for what you want quickly and securely

Send MoneySend Money

Send money to just about anyone with an e-mail address

Get PaidGet Paid

Accept online payment for items you sell

How PayPal Works

CHOOSE WHO TO PAY

• Select PayPal when checking out at online stores worldwide.

•Or use PayPal to send money to friends across town or on another continent.

1

DECIDE HOW TO PAY

• Pay directly from your PayPal balance or linked bank account.

•Or charge it to your credit card.

2

PAYMENT SENT

• Stay safer - recipient gets the money without seeing sensitive financial details like your credit card or bank account numbers.

•Keep track of all your transactions on PayPal.

3

PayPal Helps Bring You New Customers

8

PayPal is:

Secure

Simple

Fast

Drivers of ConsumerDemand for PayPal

PayPal Growth

GROWTH

PayPal user accounts

2001 2005 20091999

Paypal Network

Leading Global Brands Accept PayPal

PayPal Provides an All-in-One Solution for Online Merchants

15

Protecting the security of a merchant’s information is the top priority at PayPal.

Customer’s issuing bank

Merchant’s acquiring bank

CustomerMerchant

Processor

Payment Processing

Service

Secure transactions

Pay with flexibility

Save time

International shopping

PayPal’s Benefit to Buyers

Sell with more savvy

Sell with ease

Sell with confidence

Accept debit and credit cards

Get fast access to your money

PayPal’s Benefit to Sellers

Fraud – Risk for On-line Payment

Buyer & Seller Safely

Data EncryptionData Encryption

Prevention FraudPrevention Fraud

Protection for purchaseProtection for purchase

PayPal’s Security Tool for Identity Theft

IE ColorIE ColorIE ColorIE Color FireFox ColorFireFox ColorFireFox ColorFireFox Color

Safer Web BrowsersSafer Web Browsers

PayPal’s competitors

Go mobile with your money.Obopay is the first truly comprehensive mobile payment service in the United States.

Find it with Google. Buy it with Google Checkout.

PayPal’s other products

PayPal Plus MasterCardPayPal Plus MasterCard®® Credit CardCredit Card•Use in stores and online•No annual fee•30-second credit decision-shop online without waiting for the card to arrive•Zero liability for unauthorized purchases•Reward points for purchases•Personalize it with customer’s own design

PayPal Debit MasterCardPayPal Debit MasterCard®®•Get instant access to the money you receive•Use at ATMs worldwide or anywhere MasterCard is accpeted•Earn 1% cash back whenever you sign for a purchase (1)

•100% protection against unauthrized charges to your card (2)

PayPal’s other products

PayPal Money MarketPayPal Money MarketGive teens experience managing money in a safer and more secure way:

•Immediate access•No minimum investment•Managed by experts•Competitive Return

PayPal Fund Total Return 2000 - 2008

(as of Dec,08) One Year 5 Years

PayPal Money Market Fund

2.61% 3.43%

U.S. Treasury Bills (3-month)

1.38% 3.01%

Average Annual Total Returns

PayPal’s other products

PayPal Student AccountPayPal Student AccountGive teens experience managing money in a safer and more secure way:

•Teen get the chance to learn by doing•Visibility and safeguards are built in•Sign up is fast, free and easy

PayPal Mobile PaymentPayPal Mobile PaymentTake PayPal with you – wherever you go

•Check your balance•Send money•View past transactions

PayPal and the Future of Money

WHAT IS THE VALUE PROPOSTION WHAT IS THE VALUE PROPOSTION THAT PAYPAL OFFERS TO THAT PAYPAL OFFERS TO

CONSUMERS? HOW ABOUT CONSUMERS? HOW ABOUT MERCHANTS?MERCHANTS?

VALUE PROPOSITION

Today, PayPal offers two related value propositions,

Value = Benefits / Cost (cost includes risk, life cycle costs)

Buyer’s Primary Value Proposition :

Seller/Merchant’s Value Proposition

WHAT ARE SOME OF THE RISKS OF WHAT ARE SOME OF THE RISKS OF USING PAYPAL WHEN COMPARED TO USING PAYPAL WHEN COMPARED TO

CREDIT CARDS & DEBIT CARDS?CREDIT CARDS & DEBIT CARDS?

PAYPAL IS NOT A BANK!!

• Does not provide its merchants with a Real Merchant Account. PayPal provides its merchants with a PayPal account.

• PayPal Fully Controls the paypal account in which your money is deposited.

• They do not to follow federal/Central banking regulations.

BANK• With a Real Merchant

Account, your funds are deposited into your personal or business bank account

• You control your own bank account .

•  Protected by Federal /Central Banking Regulations of each country.

PAYPAL VS CREDIT CARDS

• Currency exchange rate is much lower than the actual rate

• Paypal account required for sending/receiving money

• Funds once withdrawn cannot be recovered, since it does not follow federal banking regulations.

• in case your paypal account is hacked and your money has been used, you cannot do anything unless paypal receives the money back and gives it to you, which is highly unlikely

Credit cards

• Official currency rates are applied

• Bank account required• Credit card companies can

retrieve funds by simply reverse crediting their merchant bank accounts

• In case of a fraud u can deny the charge and your money will be returned with a minor charge of approx. $50

PAYPAL DRAWBACK’s• Can PayPal hold my money with no

explanation?  • Can PayPal freeze my account for no

reason?  

YES

Phishing Email and Spoofing

WHAT STRATEGIES WOULD YOU WHAT STRATEGIES WOULD YOU RECOMMEND THAT PAYPAL RECOMMEND THAT PAYPAL

PURSUE , IN ORDER TO MAINTAIN PURSUE , IN ORDER TO MAINTAIN ITS GROWTH OVER THE NEXT FIVE ITS GROWTH OVER THE NEXT FIVE

YEARS?YEARS?

Strategies it follows:

Competitors

&

Pay and transfer via mobile

Strategies to grow further:

Strategies cont..

WHY ARE CELL PHONE NETWORKS A WHY ARE CELL PHONE NETWORKS A THREAT TO PAYPAL’S FUTURE THREAT TO PAYPAL’S FUTURE

GROWTH ?GROWTH ?

Cell phone carriers Mobile Payments companies

Eg. Deal between Verizon & Obopay Inc. to allow subscribers to i) Make purchasesii) Transfer Money through cell phones

Results

ComparisonCompany Launch

Dates Payment Initiation Methods

How payment is authorized

Account Funding Methods

Usage Fees

Dec 2005 SMS-basedCallback,

enter PIN via DTMF

ACH

Bank Card

Free

Mar 2006

SMS-based plus IVR option

Text to Buy feature using

SMS Shortcodes

Debit Card

Callback, enter PIN via

DTMF

PayPal account

(ACH, Bank Cards, funds

in PayPal account)

Same as PayPal 1.9% to 2.9% + $0.30 USD

Apr 2006

Application on handset

SMS fallback

Debit Card

PIN used with handset

application

For SMS

ACH

Bank Card

Sender pays 10¢

New PayPal mobile

Tie – ups with Mobile Carriers

Other Counter-Active Measures

PayPal Statistics

Annual Revenue $ 2.8bn

Total Payment Volume $ 72bn

Merchant Services $ 39.5 bn

Up by 16%

Up by 20%

Up by 17%

“What the iPod

did for music, the mobile phone

will do for money.”

REFERENCES• https://www.paypal-media.com/inthenews.cfm?

ArtYear=2006• http://cybernetnews.com/paypal-mobile-has-now-

launched/• http://latimesblogs.latimes.com/technology/2010/05/

square-paypal.htm• http://www.webmasterworld.com/forum22/4956.htm

Presented by

108 Amit Gupta116 Nikhar Oza

209 Manan Mehta307 Jay Mehta

311 Nimit Parikh

Your Topic Goes Here• Your subtopic goes here