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PayPal Inc. on Wednesday said two more retail chains are rolling out PayPal acceptance in their stores. It also said its PayPal Here mobile-acceptance product, which it introduced in March, is now generally available to merchants in the U.S. and Hong Kong, markets where some 300,000 users have signed up on a waiting list for the service.
Partly as a result of this news, the San Jose, Calif.-based unit of eBay Inc. now expects its mobile-payments volume to exceed $10 billion this year, up from its previous estimate of $7 billion. The company processed $4 billion in mobile volume in 2011. “Mobile is revolutionizing how people shop and pay,” said John Donahoe, eBay’s chief executive, in a Wednesday conference call to discuss second-quarter results.
PayPal disclosed that clothing retailer Abercrombie & Fitch has begun rolling out PayPal point-of-sale acceptance to more than 900 U.S. stores, having begun testing the system just over four weeks ago. Meanwhile, men’s clothing chain Jos. A. Bank Clothiers Inc. in the second quarter began expanding a PayPal POS pilot to all of its 566 U.S. stores, PayPal said. The rollouts follow the decision in February by home-improvement giant Home Depot Inc. to offer PayPal acceptance at all of its nearly 2,000 U.S. stores.
Home Depot, Abercrombie & Fitch, and Jos. A. Bank are among 15 retailers that PayPal announced in May as having agreed to accept PayPal in their stores. PayPal has said it expects to have 20 retail chains signed by year’s end. PayPal users access their accounts at the point of sale either through a special PIN-protected card issued by PayPal or through the user’s entry of a mobile number and PIN at the POS terminal.
Wednesday’s news follows PayPal’s announcement earlier in the week that it had acquired card.io, a San Francicso-based startup whose technology allows consumers to check out on their smart phones by using the phone’s camera to get an image of a payment card. PayPal had already adopted card.io’s product for its PayPal Here service, which competes with services such as Square. Besides the card.io scan, PayPal Here also lets merchants swipe cards on mobile devices with an attached card-swipe dongle.
PayPal is now serving some 113.2 million active accounts worldwide, according to statistics eBay released Wednesday as part of its earnings announcement. That’s up 13% from 100.3 million in the year-earlier quarter and 3.1% from the 109.8 million reported for the first quarter. Payment volume hit 564.8 million transactions in the quarter, a 31% jump from 432 million in the second quarter of 2011.
Payment volume worldwide is now $34.5 billion, an increase of 20% year over year. Of that volume, $23.1 billion, or two-thirds, comes from merchant clients rather than from traffic on eBay. While PayPal’s new projection of $10 billion in mobile volume provoked stock analysts during the conference call to ask whether mobile might be stealing volume from PayPal’s online channel, Donahoe said the company “is not overly focused on what is incremental or not.” Ebay pays more attention to what payment devices consumers want to use, and these devices clearly include mobile, he said.
For the quarter, PayPal achieved a 66.3% transaction margin, after subtracting transaction expenses and fraud losses from transaction fees. This is up from 63.6% a year ago and 65.6% in the first quarter.
