STORES Magazine - April 2011 - (Page 48)

NUTS AND BOLTS / ALTERNATIVE PAYMENTS You’ve Got a Friend ue largely to sluggish retail sales, overall credit card sales volume has been stagnant in recent years. Despite that, PayPal, until recently viewed as an online auction payment vehicle, has been steadily growing its retail payments business. D Online retailers use PayPal to ease consumer payment security worries BY LAURI GIESEN The San Jose, Calif.-based company handled $56 billion in payments for retailers in 2010, up 42 percent from the year earlier. PayPal executives attribute the recent growth to strong consumer demand for an alternative way of giving their credit card numbers to retail sites. PayPal users register their credit card numbers and, when making online purchases, give retailers their PayPal account number. “We’ve seen a large consumer demand for a fast, secure way to make payments on the web,” says Eddie Davis, PayPal senior director of SMB merchant services. “We’ve made it easy for consumers to protect their card numbers in a way that is easy to understand.” For the merchants, the benefit is also ease of service. “We can get them up and running in a relevant way very quickly,” Davis says. The PayPal appeal is particularly strong to smaller online retailers that don’t have automatic consumer brand recognition. They can piggyback on the PayPal brand name, easing the minds of customers who might not want to give credit card numbers to an unfamiliar retailer. An easy transition When Davis joined PayPal in 2005, the company had found that a “large base of [parent company] eBay users 48 STORES / APRIL 2011 Javelin Strategy & Research, a consulting and research firm. “They have had significant growth in both transaction activity and the number of merchant accounts they’ve signed. They’ve become a well-recognized brand in a relatively short amount of time.” The desire to transition from auction sites to broader retail payments was partially the result of the realization that what many perceived as a person-toperson (P2P) payment service — eBay customers paying eBay sellers, for example — was “bigger than P2P,” Robertson says. “There were a lot of small businesses and home offices that were using • 83 percent of merchants reported a lift in sales since offering PayPal Source: Ipsos Public Affairs study • 86 percent of merchants believe their customers “appreciate” the option to pay using PayPal • 84 percent of those reporting a lift in sales say it happened within three months wanted to use their PayPal accounts at more retail locations,” Davis says. “We found that if we could make it easy to use and understand, there would be a demand. Up to that point, many of the payment services associated with e-commerce were difficult to understand and use.” Industry watchers have been impressed with PayPal’s success in making the transition to retail payments. “They’ve done very well in retail,” says Beth Robertson, director of payments research for Pleasanton, Calif.-based PayPal to buy and sell on eBay. PayPal was able to capitalize on that fact and look at other small businesses that needed help with payments.” Simple numbers helped convince a large number of online retailers to accept PayPal payments. “Merchants offering PayPal see a 14 percent higher ticket size average than other retailers,” says Davis, “and 23 percent increased conversion vs. credit cards.” PayPal has also been more successful in recent years in partnering with financial institutions in a way that benefits all WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - April 2011

Stores Magazine - April 2011
Contents
Editor’s Page
President’s Page
Trends
Retail People
Analysis
Chain of Uncertainty
Mobility
Sustainability
Visibility
Legislation
Concept2watch
Digital Couponing
Energy Management
Social Media
Cross-Channel Metrics
Broadband Bonding
Workforce Management
Alternative Payments
Recruitment
Research
Online
Divisional Update
NRF News
Point of View
Retail Industry Calendar
End Cap

STORES Magazine - April 2011

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