Thursday, January 29, 2004

Paypal profits rise substantially...

Oliver Travers (at the weblog Start of Fee) quotes this article in the Internetretailer on Paypals profits:

"PayPal, the payment transactions unit of eBay Inc., reported revenue of $132.6 million for the fourth-quarter ended Dec. 31, up 77.5% from $74.7 million in the year-earlier period. For the full year, PayPal had revenue of $436.7 million, up 85% from $236.6 million in 2002. [...] Most of PayPal?s revenue is from the fees it charges merchants for payment transactions."

We may conclude (contrary to common belief here in the Netherlands...):

1-new payment mechanisms can make a profit,

2-the new retail payments market via new media is international,

3-Paypal is by far the unbeatable first-mover in the new media payments / e-money domain.

Paypals profits show that taking a Dutch approach to a new payments debate may not be the proper way forward. Most likely the number of Dutch customers at Paypal is bigger than the number of Dutch customers at Way2Pay, Minitix, Tootz, Wallie-card etc. altogether. Still, the recent report of our Ministry of Economic Affairs hardly recognizes the role and significance of Paypal as (soon to be) Europe's largest e-money issuer and institution....

Assuming that history will repeat itself, we should not be surprised when Paypal Europe starts using the available EU-legal instruments to correct wrongdoings in the EU-market of e-money. Let's not forget that only some 20-odd years ago Visa were doing the same to enter the protective EU-markets.

I think it would be good to remember that Paypal has a US background and is drilled to understand and respect the regulatory rules in the market. This US-background also means that they will not hesitate to sue other private or public organisations that do not live up to the same rules and that distort the level playing field.

So Paypal will at some point in time undoubtedly demand that any electronic money issuer will abide with e-money rules and with competition rules as to overcharging the merchant. Given both its own resources and those of E-bay, the other players in this market may be in for a bumpy regulatory ride.