PayPal, eBay see huge gains in mobile transactions

by Phil Hornshaw

The trend of consumers turning to their mobile devices to spend money and purchase goods is moving so fast, not even the people making the transactions possible, like PayPal, are able to keep up with their predictions of its growth rate.

That’s the story from GigaOM, which points out that PayPal undershot its estimates for how much money it would process through its mobile apps on Google’s Android operating system and Apple’s iOS platform. The online payment company originally estimated in Fall 2010 that it would process about $1.5 billion in mobile payments in 2011, which was double the $750 million it processed in 2010.

But by April, PayPal had revised that estimation up to $2 billion. By June, it had to change the prediction again -- $3 billion. Then in October, the numbers suggested PayPal would process $3.5 billion in volume, but even that number was wrong. This week at the Consumer Electronics Show in Las Vegas, PayPal announced the mobile payment volume it processed during the last year: $4 billion.

That’s not only a huge number, it’s a huge number that even PayPal didn’t see coming as early as six months ago. We know the trend of people becoming more comfortable with their smartphones and using them as extensions of online shopping is on the uptick, but PayPal’s numbers could suggest it’s growing even faster than anyone previously thought.

PayPal’s parent company, eBay, is seeing similar shifts in volume to mobile, GigaOM reports. In 2010, the company moved about $2 billion in gross merchandise value thanks to mobile transactions through its apps; in 2011, that number spiked to $5 billion. And 2012 should be even better, with eBay estimating $8 billion in gross merchandise value across mobile for itself and $7 billion in mobile payment volume for PayPal.

It’s not just good news for eBay and PayPal. The rise in mobile transactions is good news for all retailers, and we saw mobile make a big splash during the last holiday season. Records for mobile sales were expected to snap across Black Friday and Cyber Monday, and IBM recently reported that 14.6 percent of all traffic to retailers’ sites during December, plus 11 percent of all online purchases during the same time, came from mobile devices. Both those numbers were up significantly over 2010, rising from 5.6 percent and 5.5 percent, respectively.

More people using their smartphones to make purchases means a variety of positive things for the industry, like better apps and support to make that online shopping possible. Already there are thousands of retailers in the Android Market that make it easy to use their mobile apps to buy the things you want and need. With more customers to court and more money to be made, the mobile shopping experience will only get easier, more useful, faster and better.