PayPal Mobile PaymentsDRF Conference April 26, 2006
2CONFIDENTIAL & PROPRIETARY
105 million PayPal accounts worldwide
$27.5B payment volume in 2005 $8.8B in Q1 ‘06 10% of US e-commerce 5% of global e-commerce
55 markets & 6 core currencies
1.7M transactions daily
PayPal: A Global Standard in Online PaymentsPayPal: A Global Standard in Online Payments
PayPal user accounts
Millions
1 2 3 5 7 8 10121417192327
323540
4550
5764
7279
87
96105
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Q1
2000 2001 2002 2003 2004
46%YoY
growth
2005 2006
3CONFIDENTIAL & PROPRIETARY
PayPal Enables Cross-Border TradePayPal Enables Cross-Border Trade
Can be used in 55 markets
PayPal availablePayPal available + Local Bank Acct. Withdrawal
US
Pre-20032003
UK
2004
NL, DE, CH, ATFR, BE
2005
AU
ITES CN
CAIE
4CONFIDENTIAL & PROPRIETARY
Source: Nielsen/NetRatings data. Monthly unique audience
PayPal users are activePayPal users are active
PayPal users are active online shoppers Are 2 ½ times more likely to have
purchased a product online in the past week Estimate that they spend 12% more online
than do non-PayPal users
PayPal users are highly loyal Would prefer to purchase from an identical
online business that offered PayPal as a payment option over one that did not (>80%)
State that they are more likely to buy from an online business a second time if that business accepts PayPal (>80%)
Balanced gender representation:50% Male : 50% Female
Source: PayPal Brand Tracker, Ipsos-ASI, Q4 2005Past 3 month online shoppers who currently use PayPal
0 - 2 times/yr13%
3 - 10 times/yr42%
11 - 20 times/yr21%
21 - 50 times/yr15%
> 50 times/yr9%
How often do you use PayPal?
5CONFIDENTIAL & PROPRIETARY
Merchant Value PropositionMerchant Value Proposition
0.17%
1.14%
0.33% - 1.80%
1.80%
PayPal sellers First Annapolis(chargebacks
only)
Gartner (2001) CyberSourceOnline Fraud
Report
Seller online fraud losses, as a % of sales
50-90%lower loss
• Fraud models
• Card & bank verification
• Economies of scale/skill ─ 600+ fraud ops team
• Seller Protection Program
Typical incremental sales from PayPal
5-15%
1-5%
Large merchantsites
Small merchantsites
• Privacy / safety
• 105M user accounts
• “Wallet” convenience
– Bank transfers
– Balance payments
– PayPal buyer credit
6CONFIDENTIAL & PROPRIETARY
Why Alternative PaymentsWhy Alternative Payments
4+ methods
3 methods
2 methods
1 method
Note: Payment methods include general purpose bank cards, private label cards, gift certificates, electronic checks, recurring billing, instant credit (‘bill me later”) and PayPal
Source: CyberSource, May 2004
72%
71%
66%
60%
7CONFIDENTIAL & PROPRIETARY
Online Digital Content MarketOnline Digital Content Market
Digital Content is selling online For consumption on every device imaginable and propelled by music and mobile 2005 Online Music Sales topped $1.1B 2004 Online Micropayments (<$5) grew 282% One-time Micropayments grew from 7% of all on-time purchases to 18%
PayPal’s Micropayments Initiative - PP enables producers and distributors to sell DC directly to consumers through multiple solutions Announced Micropayments rate of 5% + $0.05
Enabling new business models that aren’t viable with standard “fixed fees”
Leverage “Pre Approved Payments” to extend benefits to mobile Subscriptions are an easy introduction through our standard subscription product
or through PAP
Trend: Convergence of online and mobile Mobile generated content to PC/Web
Nikon’s focus on digital and WiFi capabilities
Podcasting to mobile phones MobiTV, SLIDE and others
8CONFIDENTIAL & PROPRIETARY
PayPal’s “Pre Approved Payments” Gives Digital PayPal’s “Pre Approved Payments” Gives Digital Content Merchants the Flexibility They NeedContent Merchants the Flexibility They Need
9CONFIDENTIAL & PROPRIETARY
Mobile vs. InternetMobile vs. Internet
598
154
394
120
367
251
167
143
199
241
Total world market (in millions)
North America China Rest of world
Western Europe
Japan and Asian tigers
PC/ internet centric
Phone centric
Mobile Subscribers
Internet users
1,977Mobile Handsets
1,046Internet users
PC Installed base
798
Source:Morgan Stanley; Economist Intelligence Unit; Gartner
10CONFIDENTIAL & PROPRIETARY
Mobile Payments OpportunityMobile Payments Opportunity
2B mobile users globally (2005) 208M in US (68% nearly = internet penetration) 65M in UK (114% penetration vs. 63% internet) In 30 top countries avg. penetration rate is 80% 2T GSM text msgs sent (5.5B/day)
Convergence of internet and mobile Faster and faster networks (GPRS, 3G, 4G & WiFi) Avg screen size is almost 5x bigger
Payment opportunity is as big as Internet advertising Mobile Internet Premium Services $19B in 2005, vs $19B
in all Internet advertising• High growth rate (to ~$50B by 2009)
Sources: Portius Research, CTIA, Morgan Stanley
11CONFIDENTIAL & PROPRIETARY
Natural extension: e-commerce to m-commerceNatural extension: e-commerce to m-commerce
Launched April 6 in North America and April 25 in UK
“Mobilized” PayPal accounts, access via SMS or IVR w/ PIN
Three services: Person-to-person payments
Gifts, pay-backs, personal commerce
Text to Buy Any advertisement becomes POS
Text to Give Grassroots impulse donations
Send money anytime, anywhere – securely with your phone
12CONFIDENTIAL & PROPRIETARY
The Text to Buy buyer experience is quick and The Text to Buy buyer experience is quick and easyeasy
Sam sees an ad anddecides to buy.
Sam texts “DVD” to “BUYIT”.
Sam confirms payment via IVR and enters PIN.
Package arrivesat Sam’s specified address.
1
2
3
4
Hi Sam. You’ve askedto pay $20 for the DVD. Enter your PIN to confirm.
To: BUYITMsg:DVDMsg:
EXPERIENCE FOR PAYPAL MOBILE ACTIVATED
Sam sees an ad anddecides to buy.
Sam texts “DVD” to “BUYIT”.
Sam receives a message to activatePayPal mobile. The offer will be held open.
Sam goesonline to activatePayPal mobile, then replies or tries again.
To complete this trxn, activate at www.paypal.com/mobile. Offer will be held open for 5 days
1
2
3
4
EXPERIENCE FOR NON-PAYPAL MOBILE ACTIVATED
To: BUYITMsg:DVDMsg:
“Wow – that will be huge.” “Instantly buy with no hassle.” “This is the future.”“I’d buy things… On the ‘L’ or the bus, I’d see an ad for a new CD… It just comes in the mail. It’s so simple.”
(Source: Consumer reactions to Text to Buy , Qualitative User Research, August 2005, September 2005)
13CONFIDENTIAL & PROPRIETARY
Direct sales via ads & media
Benefits of Text to BuyBenefits of Text to Buy
Brand/OEM Incremental direct sales Measurability/ROI of ad spend Direct relationship with customer;
CRM data New, unique classes of purchase
occasions; customer intimacy Associate product and brand with hip,
new channel
Purchase whenever you want, wherever you are
Convenience, speed, fun Cool, new experience that fulfills the
promise of m-commerce New ways to use existing trusted
accounts Access to limited, exclusive offers
Consumer
Text to Buy
14CONFIDENTIAL & PROPRIETARY
Examples of Text to Buy ImplementationsExamples of Text to Buy Implementations
Bravo 10 & 20 second television spots with web support
Walk the Line print ad
15CONFIDENTIAL & PROPRIETARY
Go Forward. Go Mobile.Go Forward. Go Mobile.
SMS Direct Response Sales (T2B) Text to Give Electronic rebate payments Virtual merchant specific gift certificates No inventory retail events
Add another direct-to-consumer channel: Bricks n’ mortar MoTo eTailing+ Mobile