PayPal extends reach both online and in physical finances

16 November 2009

PayPal has begun its expansion across the online payments systems through one of the most unorthodox methods. PayPal has announced that it will make available its software base code to all web develops, users and designers so that they can create their own ideal online payment system.

PayPal has stated that it knows that it cannot satisfy everything that the massive online consumer industry demanded from an online payment system, despite the fact that PayPal is used for around 90 per cent of all online payment transactions. So as a result, they have decided to let those who want more to simply design their own perfect online payments system.

"In the past we tried to define the needs and make the solutions, but we don't know the whole story. The next 18 months are going to see massive changes and innovations in payments," says Dinuke Ranasinghe, PayPal's Australian managing director.

It is predicted that thousands of newly designed banking and payments products and applications will be created to suit the demands of the predominately online generation. This influx of new payments programs is expected to create high competition for Australian banks while virtually eliminating any other online payments systems.

PayPal already has seven million Australian accounts from only four years and has now also begun to move into the physical banking industry, with its target market being the Gen Y banks customer.

Typically speaking, Gen Y and Australian banks have not established any form of relationship with Gen Y coming into the banking industry throughout the financial crisis and when a time when cynicism for banks is at its peak.

Banks have begun trying to win over the technological generation by appealing to them through their social networks, such as ANZ Banks recently launched MySpace Recharge card. This debit card is available to all MySpace account holders 13 years and older that has a usage and rewards system linked through the MySpace website.

MySpace spokesman Nick Love said "The MySpace Recharge prepaid Visa card is unique in that it allows under 18's and people that don't own a credit card the freedom and security to spend their own money on items such as concert tickets and clothes, at millions of online and retail stores worldwide."

While the banks may be doing their best to win over the younger generations by appealing to their online social lives, PayPal has an advantage as being an established online presence that is already linked with their online profiles.

This is expected to be a major advantage when PayPal eventually moves out of the virtual world where it currently dominates into the daily spending activities of these generations. Paypal has explained that it wants to move into this industry soon by introducing PayPal Eftpos cards and PayPal enabled mobile phones using payments technologies that are based on the PayPal software base code.

"We are the most preferred online payment method now and it is a natural progression for PayPal to move into the physical space," said Ranasinghe.

This is expected to particularly disrupt credit cards and debit cards that target this demographic, with credit cards interest rates putting off new banking customers while PayPal boasts a brand they know and are comfortable with.

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