14 DAY TRIAL // PayPal is one of eBay’s best performing businesses, but the online payments market is changing fast. But PayPal may be getting into two of the most promising areas, mobile apps and micropayments.
PayPal’s interest in micropayments has been known, the company has said that it plans to change its fee structure and make it easier and cheaper to pay very small amounts for items. Now, the company is said to be launching a dedicated micropayments solution by the year’s end.
The second rumor is even more interesting, apparently, PayPal is in talks with Google to introduce it as a third payments option for the Android Marketplace. Android users can pay for apps via a credit card or using Google’s own payments system Checkout.
Micropayments are becoming a huge business. With the rise of social games and virtual currencies, small transactions are becoming increasingly profitable, with scale. Zynga, the biggest social gaming company of the moment, is said to already be PayPal’s second biggest customer, after just eBay, which owns the payments company.
But a partnership with Google could be very profitable as well and it’s certainly a surprising move. Checkout hasn’t proven very successful, certainly nothing like PayPal, but Google hasn’t given up and used every opportunity to prop up the business.
It’s done this with Android as well, Checkout is the only other payments option besides paying directly with credit cards. While Android is booming and is becoming the dominant smartphone platform on the market, it’s still behind iPhone in one respect: apps.
Paid apps are less popular on Android phones than they are on the iPhone and this is at least partially because it’s harder to pay for them. So developers haven’t been flocking to create apps for Android phones. While Google would very much like to make Checkout a true competitor to PayPal, it does realize that some fights it just can’t win and that a partnership with PayPal may prove much more beneficial on the whole.