E-Commerce

Posted: September 6th, 2013

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E-Commerce

1. What is the value proposition that PayPal offers consumers? How about merchants? Do any of the competing proposals match the benefits of PayPal?

PayPal has benefited consumers and merchants in different ways, as an online payment method. PayPal has a direct relationship with all its customers, something most of its competitors have not been able to do. This makes it easy for both the consumers and the merchants to get better and quality services. PayPal is versatile, and most merchants prefer using it, as their preferred method of charging and payment. It is easy to use, and it is secure. Consumers using PayPal, to send or receive payment do not have to be worried about security concerns. PayPal has a huge client base. It was able to capture the market when online payment methods were not strong and reliable. This has made it the preferred choice of payment for online consumers. Some of the competing proposals match the benefits of PayPal, although they do so to a smaller extent. They do not have a wide client base, and this limits their potential.

2. Why would the telecommunications carriers like AT&T and Verizon want to move into the payments business? What chances do they have to compete against Google? What’s their advantage?

Cell phone carriers have realized the potential for making more profits through the payments business. They have realized that all mobile companies have to use their services, for them to conduct their business. Telecommunication carriers have a chance to compete against Google, if they develop their products well. They can take advantage of developing on the weaknesses of their competitors, and by developing relevant products that will fit the market. Customers using the telecommunication carriers do not have to use their credit cards, and they do not have to worry about credit card debt, since their purchases are charged to their mobile accounts. This is an advantage to the customers. The carriers do not have to use credit card companies, and this reduces their costs. This ultimately reduces the costs charged to the consumers, and this makes the services cheaper.

3. The Smartphone giants Apple and Google control the operating systems and technological features of the devices. Google exercises this control not by actually making the devices but by licensing its Android system and demanding device makers include certain features. Which of these Smartphone firms has the greatest chance of successfully developing a web-wide wireless payment service? Why?

Making the device enables the manufacturer to incorporate many applications, and to change them, as the need requires. Doing so is more flexible, since the company can change the device, or come up with other models that will fit the market. In this case, Apple has more control of its product, and this will make it easier for the company to introduce a payment service. However, Apple has not taken the chance to develop its payment service, beyond the iTunes application. This is unlike Google, which although it does not manufacture the device, and it has made an effort in developing its payment system. It therefore has a greater chance of developing a web-wide wireless payment service.

4. What strategies would you recommend that PayPal pursue in order to maintain its dominant position over the next five years?

PayPal should concentrate on penetrating the mobile market. This is because there is a huge potential for growth in that area. The Smartphone market is bound to offer increased competition with other online payments. Consumers do not have to be worried about small screens when using the Smartphones, because the device makers are now making devices, which are more user-friendly, and with many feasible applications. PayPal could collaborate with social networking sites such as Facebook, which have ambitions to set up an online payment system. This will benefit PayPal in different ways, since it will able to attract more people from the social networking sites. Most of the online payment systems use credit cards. However, with the introduction and widespread use of the mobile payment, this poses a threat to credit card companies. PayPal needs to adopt a payment system that is more affordable, which will make it possible for customers to make purchases, without necessarily using credit cards. With the emergence of the Starbucks card, other major companies are bound to follow suit, and this means less customers for PayPal. PayPal can take the opportunity, by working with major companies and introduce special offers to the companies’ customers. This will reduce the chances of PayPal reducing its customers, and it will increase the client base.