Barnes & Noble.com To Accept PayPal
Written by Evan SchumanPayPal’s efforts to move beyond merely being the payment tool for Ebay got a big boost on Wednesday when Barnes & Noble.com said it would accept PayPal. The move could also help Barnes & Noble.com attract a younger demographic, which tends to be more comfortable with alternative payment methods and that sometimes have less easy access to traditional credit cards. That’s a good thing for retailers given the much lower payment fees associated with PayPal.
The news is not that big a deal for Barnes as retail partners of PayPal don’t typically see a huge revenue increase, but it certainly helps PayPal establish itself beyond Ebay, said Bruce Cundiff, a senior analyst for Javelin Strategy & Research and a former Jupiter Research analyst. PayPal is “certainly trying to focus on off-Ebay volume. I’ve heard that between 75 percent and 80 percent of PayPay revenue is still Ebay,” Cundiff said. “They’re really been trying to balance that out for a number of years.”
-Marc
August 18th, 2006 at 11:46 pm
One of the things that interests me most about this is that, if there are no new sales as a result of the Paypal integration, it means that any payment is volume straight out of the pockets of banks. Not a good thing if you’re a banker, since short of partnering with PayPal or Checkout, I don’t know what an appropriate competitive response would be.
August 19th, 2006 at 1:34 am
Absolutely. Clearly, one of the key retail factors behind this is unhappiness surrounding various credit card fees. From the banks’ perspective, if they start losing enough retailers to services such as PayPal, the competitive response would be pressuring MasterCard and Visa and others in that camp to cut fees.
But like so many transition issues like this, there is a very high chance that any reductions will be too little, too late. In other words, by the time the marketshare increases by PayPal and other alternative services gets large enough that it pushes card issuers to take action, it may be too late to get that marketshare back. Once the retailers switch, it would have to be a huge reduction to get them to come back.
The time for an “appropriate competitive response” is right now before PayPal and others have made a huge impact. If the issuers slashed prices right now before more retailers made the move, they could preserve much of what they still have.
The other competitive response is already being made by the carriers: pushing technology and associated features that PayPal can’t yet match, such as contactless and elaborate points programs. Then again, PayPal’s stronger positioning today may enable them to partner for such services before too long.