PayPal Australia considers new sectors for mobile transactions

Follows mobile revenue figures of $42 million in 2010

PayPal Australia is set to target the services sector and businesses without an online presence with its mobile transactions offerings.

According to figures provided by PayPal, it is processing over 1000 transactions an hour from customer's mobile phones; in 2010, mobile transactions were worth $42 million to the company. It currently has 4 million Australian customers.

Managing director, Frerk-Malte Feller, said it was in the process of contacting services companies and what he called “non-traditional” merchants.

“A future trend that we are seeing is that more and more businesses that don’t think of themselves as online are investigating how to use mobile to enhance their offline business,” he said.

For example, he said there were some coffee shops using an iPhone app called eCoffeecard that integrates payment with a loyalty offering. “You can order your coffee while you are walking to the coffee store and the payment is taken care of before you arrive,” he said.

At present, PayPal has 40,000 merchants in Australia including Event Cinemas and JB Hi-Fi. It has also signed a partnership with three daily deal websites — Cudo, Groupon and Spreets — which means customers can purchase goods using the PayPal transaction system.

While Feller said there was no cost to the merchant for offering mobile payments, it does charge a transaction processing fee.

“This fee varies by merchant, so the lowest fee is dependent on the number of mobile transactions they make; our base fee starts at 2.4 per cent plus 30 cents per transaction,” he said. “The larger merchants pay lower fees which can be as little as 1.1 per cent plus 30 cents per transaction.”

Feller said the company does not store financial information on the customer’s phone but in a secure storage system based at the company’s US headquarters, which according to Feller, has “never been compromised.”

“This method is safer than entering credit card details directly with a merchant because we never share that data with them so it can’t be compromised.”

He added that the company expected revenue from mobile transactions to grow as more merchants offered additional services. When asked if the lack of phones equipped for near field communications (NFC) in Australia was an obstacle for marketers, he said it was "not yet proven" if NFC was the right technology to use.

“It never hurts to have more options but I think the technology trends that take off are going to be decided by the consumer experience,” he said.

“Sometimes I have got the notion that people believe NFC is the requirement and an impediment to innovation in the mobile transactions area but I would disagree with that.”

Follow Hamish Barwick on Twitter: @HamishBarwick

Follow Computerworld Australia on Twitter: @ComputerworldAU

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