Once just a trading ground for newly released video game consoles, rare Beanie Babies, and other questionable investments, eBay
Cashing in online
PayPal helped drive eBay's growth even before it announced plans to enter the world of physical retail. In 2010, about 40% of eBay's revenue came from PayPal. At the moment, the service is accepted at 60 out of the top 100 online retailers, and it processes 25% of domestic online sales. Thanks to its online success in the U.S. and abroad, PayPal's total payment volumes have grown by 24% annually for the past three years.
The service should also continue to grow online as PayPal finds new opportunities. For example, Activision-Blizzard
Checking out in the real world
However, PayPal's most exciting opportunities await offline. Last week, the company previewed its plans to move into mobile payments. Unlike Google
The service will also offer a suite of tools to help make shopping easier. For example a user can scan a barcode for a big-ticket item in the store, pay for the item, then have it shipped to them without ever visiting the register. If the item the user wants is out of stock, he or she can search other stores' inventory to see whether it's available nearby. PayPal will also allow customers to apply for instant credit, which could be useful or dangerous, depending on your level of impulse control.
So why isn't eBay a screaming buy?
I see a lot of potential for PayPal's mobile payment service -- but I also foresee challenges. My fellow Fool Evan Niu has already raised questions about the security of using a phone number and a four-digit pin for verification. I can't imagine that Evan is the only person with these concerns, which could slow adoption of the service.
Even if we set security questions aside for now, the mobile payments space will get crowded very quickly. In addition to PayPal and Google Wallet, Verizon
If you'd like to keep an eye on eBay as it moves into mobile payments, click here to add it to your watchlist.The Motley Fool owns shares of Activision Blizzard and Google. The Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Activision Blizzard, Amazon.com, Google, AT&T, Visa, and eBay, and creating a synthetic long position in Activision Blizzard. Try any of our Foolish newsletter services free for 30 days.
Fool contributor Patrick Martin does not own shares of any of the companies mentioned here. You can follow him on twitter @TMFpcmart03. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.