EBay Promotes Mobile Veteran Marcus to PayPal President As POS Thrust Gains Steam

EBay Inc. on Thursday named long-time telecommunications entrepreneur David Marcus as the new president of its PayPal Inc. e-commerce payments unit. Marcus, who as vice president of mobile at PayPal has been shaping the San Jose, Calif.-based processor’s strategic shift into physical-world payments, succeeds Scott Thompson, who left PayPal in January to become chief executive of Yahoo Inc.

John Donahoe, chief executive of eBay, announced the appointment in a blog post on PayPal’s Web site. “David’s just the right leader for PayPal,” Donahoe says in the post.” For more than 15 years, he’s been a successful technology entrepreneur with a passion for great products that both engage and delight customers.”

Marcus came to PayPal in August when eBay bought Zong Inc., a company he founded in 2008 to process mobile payments via carrier billing. Marcus also founded and was chief executive of Echovox, a content-monetization company he led for nearly 10 years. He launched Zong while still running Echovox.

EBay’s decision to have Marcus run PayPal “seems like a good move, given the importance of mobile to PayPal\'s strategy,” says Aaron McPherson, director of the financial-services practice at IDC Financial Insights, via e-mail. “Since he was in charge of developing the PayPal mobile strategy, it clearly signals their intent to focus on that channel going forward, with perhaps less focus on the traditional eBay/e-commerce market.”

PayPal’s mobile business under Marcus has been expanding rapidly. The company expects to process $7 billion in mobile-payments volume this year, up from $4 billion 2011 and $750 million in 2010.

Marcus’s promotion also comes in the wake of a flurry of moves the 13-year-old PayPal has made in recent months to extend its reach in mobile payments, a market it entered in 2006. Earlier this month, PayPal introduced a card-swipe device and app that allows small businesses to accept credit and debit cards on an iPhone. The product, called PayPal Here, competes with existing dongles from a slew of companies but is viewed as a direct challenge to Square Inc., a startup that has achieved remarkable success with a similar product.

But PayPal’s mobile initiatives under Marcus have also been instrumental in helping the processor, a giant in online payments processing, achieve a long-held ambition: penetrating the physical point of sale, which still accounts for the great bulk of consumer transactions. In February, The Home Depot Inc. rolled out a PayPal payment system to all of its nearly 2,000 U.S. stores. The system lets customers pay by entering a mobile number and PIN at a POS terminal, or by swiping a special PayPal card. Another 20 chains are expected to adopt the system by year’s end, PayPal officials say.

And earlier this month PayPal unveiled what it called the first complete redesign of its digital wallet in the company’s history. The overhauled wallet, which comes with a reworked user interface, includes a number of features not available in competing products, such as the ability to change funding sources within seven days of a transaction and to store merchants’ proprietary cards, not just network-branded cards. The wallet is also cloud-based, so it can be accessed via PC or handset

Still, Marcus’s mobile thrusts have come largely without reliance on near-field communication (NFC), a two-way, short-range communication technology that a number of major competing mobile-payments projects have adopted. Google Inc. and Isis, a joint venture founded by the nation’s largest mobile carriers, have both based their product strategies on NFC, which in its typical form stores payment details in a secure chip inside the handset. Google’s Google Wallet initiative launched commercially in September, while Isis will launch this summer in two markets, Salt Lake City, Utah, and Austin, Texas.

While not rejecting NFC outright, PayPal has distanced itself from the technology, adopting it so far only for a person-to-person payments widget it introduced in November as part of an upgrade of its Android mobile app. In December, it ran a very brief test of a cloud-based NFC system in Sweden.

Marcus officially assumes his new post on Monday.