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1 Quote That Should Make Investors Optimistic About The Future of eBay Inc. and PayPal

Source: Flickr / Steve Ganz.

At a recent conference a PayPal executive provided critical insights into the rapidly expanding mobile payments industry. But one of his remarks stands above the rest to guide why PayPal could be immensely successful.

The remarkable last week
Investors learned last week that the heated battle between PayPal owner eBay (NASDAQ: EBAY  ) and activist investor Carl Icahn had finally come to a close. Icahn officially withdrew his proxy fight to separate PayPal from eBay, and the online auction house in turn agreed to appoint an Icahn-backed new member to its board of directors.

PayPal was also a silver sponsor of the TRANSACT14 conference, which dove into the rapidly changing payments industry. This is quite fitting because PayPal is an active participant in the revolution that is already under way.

The notable quote
PayPal's vice president of retail operations in North America, Brad Brodigan, gave a keynote session entitled "Winning Through Mobile," which addressed the aggressive push PayPal has made into the mobile payments industry.

This might have been Brodigan's money quote when it comes to PayPal: "If we want to see adoption, we have to solve real-world problems for everyday consumers."

Many have claimed the mobile payments industry has established itself as a sure thing and an indisputable change that'll be here within the next few years. After all, PayPal has seen its mobile payments volume grow from $750 million in 2010 to a staggering $27 billion in 2013, an increase of 3,500% in just three years.

However, Brodigan noted that a recent survey suggested only 31% of individuals were interested in using their mobile device to make an in-store payment. While that sounds strikingly low, Brodigan interestingly suggested this was in fact fairly high because consumers aren't actually incentivized to use their mobile wallets.

Source: Flickr / Janitors.

An interesting paradigm
Consider for a moment making a payment using a mobile device. By the time a phone is unlocked, an app is found and opened, the payment mechanism is accessed, and the code is scanned, it would have been far quicker to use a card or cash. In addition, many mobile payment mechanisms offer no benefits or rewards over a traditional means of payment.

Ultimately, any new technology that is adopted must provide greater rewards and benefits than cost. That certainly applies to mobile payments.

PayPal is seeking to address these obstacles so consumers can have a better payment experience. It is focused on providing customers a means to save time and money, and ultimately to providing more convenience to customers when they make payments.

The focus areas
PayPal wants consumers to save time by ordering ahead at a busy restaurant. Those same customers would be able to make a payment before the meal is over so they don't have to wait. PayPal believes these convenience examples just scratch the service as it relates to saving people time.

Source: Flickr / philcambell.

It is seeking to allow customers to save money through other means as well. Everyone knows clipping coupons is a process that has been existence for years -- but really it was a painful because it was inefficient. Whether it be clipping, sorting, finding, or any of the other means, couponing at times can cost more in terms of time than it can save with actual money. Yet mobile technologies have a significant opportunity to provide consumers a frictionless and painless way to see and use a coupon.

This benefits both consumers and small businesses. With mobile wallets, smaller merchants can reach out to local consumers, and in turn drive more sales.

Lastly, PayPal is attempting to make consumers' lives better on a day-to-day basis. The mobile payment wallet creates a safe and secure way to access payment data, merchant reward data, and other things so that users are less bogged down by information, ultimately improving the purchase experience of consumers in both payments and general use.

The key takeaway
Brodigan concluded his remarks by saying PayPal believes "we are uniquely positioned to have long-term success in the mobile payments space." If it continues to ensure both the users and merchants see benefits as they adopt its platform, it would be tough to disagree with him.

The one way to benefit from the massive change
PayPal and many other have recognized the plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

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  • Report this Comment On April 17, 2014, at 12:35 PM, foolsmate wrote:

    "PayPal wants consumers to save time by ordering ahead at a busy restaurant. Those same customers would be able to make a payment before the meal is over so they don't have to wait. PayPal believes these convenience examples just scratch the service as it relates to saving people time."

    This paragraph alone clearly demonstrates that the appalling management of the PayBay conglomerate have absolutely LESS THAN ZERO idea of how the real world works.

    The whole point of owning a restaurant or indeed ANY other business in the REAL WORLD is that you DON'T WANT customers to pay in advance, or indeed BEFORE the end of a meal. Almost all the profit a business will make on the sale will come from incidental add-on purchases made during the time the consumer is on the business premises. Making them pay in advance negates any opportunity to make these sales.

    Take the restaurant example. The daily menu will be geared to enticing the customers to part with as much cash as possible. Whether it's that extra special mouth-watering dessert the diners on the next table had chosen or an extra bottle (or two) of wine, these purchases would never be made in the scenario envisaged by the lunatics at PayBay because they just don't live in the REAL WORLD!!!

    If they did there would be endless opportunities for eBay sellers to upsell and add value to a transaction. Not only are there ABSOLUTELY NONE but now it's even worse than that as customers are forced to pay for items immediately thereby actively discouraging them from making additional purchases from the seller.

    Icahn realised that separating PayPal from eBay was a bad idea because without its PayPal profits the dreadfully managed eBay would just curl up and die taking his investment with it. If PayPal was a separate entity it would have to provide payment services for other competitors to eBay, both established ones like Amazon and new young upstarts who could do the job a million times better than eBay ever will under its current management.

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Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

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