PayPal Nabs Uber Partnership in Pursuit of Mobile Growth

November 20, 2013 Leave a comment

PayPal Nabs Uber Partnership in Pursuit of Mobile Growth

PayPal, the online payment service that succeeded by wedding itself to EBay Inc. (EBAY), is moving into more modern marketplaces through a deal with car-service company Uber Technologies Inc. Users of Uber’s popular mobile-booking application will be able to pay with PayPal starting today in the U.S., France, Germany, Italy and the Netherlands, David Marcus, president of PayPal, said in an interview. Riders who use PayPal before Nov. 28 will receive $15 or 15 euros toward their next trip.After pioneering Internet payments and then being acquired by San Jose, California-based EBay in 2002, PayPal became a multi-billion dollar annual business. The company has been slow to make headway into newer marketplaces that cater to a mobile-savvy group of users and developers, Marcus said, while posing as an Uber driver and chauffeuring reporters around San Francisco to show off how the service will work.

“Our experiences inside mobile apps were not meeting the bar a year ago,” Marcus said, from the driver’s seat of a black Ford Expedition. “It’s important to be where disruption occurs. You want to partner with the companies creating an amazing consumer experience.”

The market for mobile payments in the U.S. is projected to jump to $90 billion in 2017 from $20.5 billion this year, according to Forrester Research. (FORR) In that area, PayPal faces stepped up competition from Square Inc. and Google Inc.

PayPal has been criticized for antiquated software that makes it hard for merchants and developers to use the service, something Marcus has tried to streamline. He vowed to bring “startup energy” to PayPal when he took the helm in April 2012.

Mobile Upgrades

To work better with mobile services, PayPal has developed functions that allows users to pay without leaving a merchant’s app. Its shortcomings on mobile gave younger companies with simpler offerings such as Braintree a chance to win users at PayPal’s expense. PayPal agreed to acquire Braintree earlier this year for $800 million.

The improvements may help PayPal make headway into other popular marketplaces such as room-sharing service Airbnb Inc., which doesn’t use the company’s payment offering in its mobile app, Marcus said.

Uber is banking on international growth to justify its $3.5 billion valuation, achieved in a financing round led by Google’s venture arm in August.

The company only allows users to pay via mobile phones and is limited in countries such as Germany that don’t have wide credit-card adoption, Travis Kalanick, chief executive officer of the San Francisco-based company, said in an interview.. PayPal’s 137 million active users were also a draw.

“Who else has that kind of distribution — is there even anyone close?” Kalanick said. “The PayPal deal helps us go international. For Uber, this is about new users.”

To contact the reporter on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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