Why PayPal Isn’t Scared of Amazon in Mobile Payments

May 21, 2018         By: Steven Anderson

It’s the kind of thing that’s given shop owners night terrors for years: Amazon turning its attention to their particular piece of the market. With Amazon looking to make a run at mobile payments, you’d think that would have the various Pays, from Apple to Samsung and beyond, quaking in their collective boots. Perhaps the original Pay, however—PayPal—is less than concerned, as a recent interview with PayPal CEO Dan Schulman with The Street found.

We saw recently how Amazon was looking to get into the mobile payments market with a special discount, the same discount that it would have had on credit card fees that it’s just passing to retailers that use the service. The announcement was enough to send several mobile payments firms’ stock prices—from Square to Visa, and yes, PayPal—down as a result.

Schulman’s interview features him going on the offensive, pointing out that PayPal already has market share, and plenty of it. With over 19 million merchants worldwide accepting PayPal already, PayPal is basically already an Amazon of mobile payments. Plus, PayPal is about a lot more than payments; Schulman noted that PayPal has “…literally more services hanging off that platform than one probably realizes.”

Further, Schulman noted that the mobile payments industry as a whole was still a “very, very early innings” proposition, and that even PayPal, advanced as it is, has only taken about one percent of that market. Schulman even noted that the whole market was still developing, and offering a “rising tide” for other businesses to get in. Businesses like Amazon.

PayPal has one major advantage to its credit right now: sheer inertia. PayPal users are likely to remain PayPal users as long as the quality of PayPal’s offering exceeds, in the mind of the user, the hassle of switching over to someone else. So if PayPal can continue to produce innovation and add value, it will almost certainly maintain its entire user base, or at the very worst, lose a little of it.

As a PayPal user myself, I don’t intend to leave it. Will I switch if someone else makes me a better deal? Sure…but it’s going to take a really strong deal to get me—and those like me—to jump ship.