PayPal has announced that it is well on track to process $3 billion in mobile payments this year. The current number is a 50% increase on its previous projections according to which PayPal anticipated to rack in $2 billion in mobile revenues in 2011. In fall of 2010, PayPal projected that it will generate $1.5 billion in mobile revenues in 2011, a figure that it soon had to revise upwards to $2 billion.
Laura Chambers, PayPal’s GM for mobile payments attribute much of this success to the explosion of smart phones and the familiarity of users with PayPal. According to Chambers:
Every week I look at the numbers, I get a sense of surprise.
PayPal’s mobile business can be categorized into two categories, person-to-person mobile transactions and the purchases that individuals make from there mobile devices via PayPal. PayPal does not make any money from person-to-person mobile transactions except for some minor cross border fees. The bulk of PayPal’s mobile revenues are generated by charging fee from users buying items from their mobile devices.
PayPal grew by 23% during the first quarter of this year, and eBay CEO John Donahoe expects PayPal to soon become the company’s biggest business division in a few years. PayPal currently accounts for 40% of eBay’s overall revenues.
PayPal faces stiff competition in the mobile payments space from startups such as Square, Big-COs like Google – that has just launched its Mobile Wallet service, and mobile operators like O2.