PayPal and the Banking Industry

PayPal is an internet treasure. For many years they have contributed to a big part of eBay's profits. They have always focused on improving their only service: sending and receiving money. Like an email! They have contributed to the development of the internet making earning money online really easy. PayPal was a disruption to the payment methods market and, to a lesser degree, to the banking industry.

PayPal nowadays is more than a online payment method. It is a bank. A bank with a non traditional business model, but none the less a company that retains people's money and charges them to use their services. PayPal operates in 190 markets, and it manages more than 228 million accounts, more than 73 million of them active. PayPal allows customers to send, receive, and hold funds in 19 currencies worldwide. While the banking industry is caught up fighting against its own mistakes, PayPal is continuing to improve its business model and operations: eBay's Payments segment (including PayPal and BillMeLater) revenue was $817.0 million for the thrird quarter 2010, an increase of 22% year over year.

I think the best is yet to come with their mobile contribution to the payment industry. PayPal today is facing a major challenge with their approach to mobile payment. If they solve the problems of the micropayment industry with mobile phones and they disrupt user experience again in this field, the online payment arena will be theirs for many years. PayPal knows that this is the next strategic step they need to confront, the question is, will they be able to finally figure out the essence of the mobile messaging systems like they did with the internet and emails?