Payment reform: Facebook and the like to catch up with Paypal Square

2011 will be an important payment, the payment in the field of entrepreneurial companies and large companies to obtain more funding. Speculation is necessary to recognize those who seek the company intends to have a share but the slow network giant, and those who bring real subversion of the company. Facebook and the Square are two notable companies.

Paypal weakness

eBay's growth engine Paypal rapid momentum of growth, still enjoy the benefits of network effects, the size of businesses in many industries are using PayPal. In addition, other banks and other financial services, people also like to PayPal to issue complaints, but little improvement will not be easily transferred to other services up. However, PayPal is far from impregnable. It also has some weaknesses.

First, PayPal's services over the past decade has matured. PayPal wartime role in the product and policy decision-making has become a structural problem, while improving profits and income there are many constraints. PayPal's most popular products, most small businesses still require the user to go to PayPal's site to complete the payment, PayPal risky for businesses that would impose restrictions (such as 10-20% of the transaction amount will be detained for up to 120 days), These services could be improved, but also for other new services provide opportunities.

Secondly, PayPal relies heavily on existing credit card-related business and banking institutions. Although the buyer has acquired the certification on-site credit Bill Me Later, their payment is still a strong focus on business credit cards and direct bank payments started. The resulting loss of how to reduce fraud and credit levels and how to price the issue. Paypal have struggled to attract more people entangled in bank accounts and credit products through the payment of, or had to reduce the basis of the basic card costs a few basis points. So small businesses are often started from PayPal, but later left PayPal, instead seeking refuge features more sound business account, so that you can directly use the credit cards, enjoy the lower cost of other products.

Third, PayPal solutions and processes in the all too American. Although its business around the world, especially in Europe and Asia, but its market share in the United States is far from big. Other countries have significantly different control problems, and sometimes different payment processes and habits; some of the lingering problem of proof is not always based in the U.S. advantage. For many companies, how to become a truly international company, how to combine the local market to create a distributed network, the product of adjustment is a lingering problem.

Finally, the PayPal huge need to address the dilemma faced by innovation, which will hinder the development of PayPal in the small market penetration, the result is not to usurp the initiative. However, this issue is to look at two aspects, PayPal is the user experience and technology, increase investment, even relatively late entry, with its enormous size may also hold considerable market share. But the bigger user base has been considered not done in the past is a huge advantage, because now the new entrants into the consumer (the Internet or mobile Internet) products in the weeks or months of time to get a large number of users, In addition, there are other soon after the establishment of innovative consumer products company is also glued to pay the market.

So, PayPal's leadership faces two competitors: the first is to have a lot of emphasis on the user's consumer brands; The other is rooted in the unsaturated market companies to pay, especially outside the United States, is not based on generally based on the credit card and bank (or even rely on phone bill or other secondary derivatives) of companies.