PayPal - Would It Be Able to Survive Google and Microsoft Onslaught?

Established in 1998, PayPal, now an eBay company, allows on line merchants to accept payments for the sale of goods and services. Its vast infrastructure and tie-ups with bank accounts, credit cards virtually make it a real time payment solution provider. PayPal has quickly become a global leader in online payment solutions with about 90 million account members worldwide. Available in 55 countries and regions around the world, buyers and sellers, online businesses, as well as traditional offline businesses are transacting with PayPal. PayPal has been awarded webby award for best finance site, webby's people choice award besides numerous others.

PayPal allows almost any sale except for usual restriction as counterfeit items, drugs, gambling, pornography, virus adult toys etc. If you are auctioning, it can automatically send winning notification to buyer and can also take care of your shipping needs. It offers you tools to calculate shipping costs, create shipping labels, track delivery, pay for insurance for shipped items etc and many more tools are likely to be released in next few months.

PayPal has done wonders for eBay. Since it was taken over by eBay, eBay's revenue is growing and last year, 23% of eBay sales were through PayPal. PayPal pays for referral too at 0.5% of the commission subject to $1000.

Safety Measures

PayPal has a strong workforce and probably because it has the largest market share, attracts large number of fraudsters too. It employs state of the art fraud detection and protection software and recently acquired Verisign Payment Services at a heavy cost of $370 million to add industry's leading tools for payment protection. It has dispute resolution specialists to help both buyers and sellers to intervene in the event of any dispute. PayPal, though allows charge backs subject to fulfillment of certain conditions.

However, charges against it fly thick. By an estimate at any time, about 100,000 complaints are pending against it. The foremost being that in the event of a customer using a stolen credit card, the money owing to seller is confiscated! And worse still they won't tell you the documents they relied upon in reaching a decision against you.

It is likely to face biggest challenge in its life as emergence of GBuy from Google. Expected to be launched in late 2006, it is expected to eat significantly into its market share. Though Google has not announced its full range of services, they are expected to be innovative and competitive. PayPal could get another dent in its bottom line from "Expo" a similar service soon to be launched by Microsoft. PayPal must recover from its poor reputation faster than one may think.

Not that PayPal is sitting idle. It tied up with FireFox to have latest toolbar released with "Send Money" extension. PayPal has announced its plan to enter Chinese market too.

In some cases, where even empty package was received form sellers, PayPal has purportedly refused claim classifying as "dispute of goods": and not "non-receipt" issue, while in other cases, even for a small charge back, entire amount in the account of seller was frozen and that too without a chance to explain. No doubt, sellers eventually won the claim.