Mambo swamped by PayPal

Jason Bryce
PayPal will be a ubiquitous part of the Australian payments landscape within 18 months, says outgoing Australian managing director Dinuke Ranasinghe.

Ranasinghe said PayPal is rapidly migrating off the net and onto cards and mobile devices.

"We are the most preferred online payment method now according to Nielsen 2009, and it is a natural progression for PayPal to move into the physical space," said Ranasinghe, pointing to a slide picture of a PayPal card touching a contactless reader.

Speaking at the Smartcards and Innovative Payments Conference in Canberra yesterday, Ranasinghe said that the key to growth for his company was in opening up the software code base to outside developers.

"In the past PayPal defined the market inefficiencies and made the solutions, but we don't know the whole story, developers know that the best.

"Now they are finding the inefficiencies and making their own widgets, their own applications using PayPal."

Ranasinghe said a good example of this was the 18-month-old Xoom remittance business, based on PayPal code, which has already handled over one billion US dollars.

"In the next 18 months there is going to be a lot of very fast innovation."

PayPal is already one of the most downloaded iPhone applications globally with other mobile payments spin offs, such as Invoice2Go, gaining market traction, said Ranasinghe.

The Australian online debit payments project, Mambo, was first discussed about three years ago then quietly forgotten as banks saw more value in working with scheme payments.

However that value proposition is waning now, says Commonwealth Bank's general manager of Merchant Solutions, Dominic White.

"Credit spend is slowing, growth of 3.0 to 3.5 per cent over the 12 months is the lowest on record.

"Visa and MasterCard have put their fees up twenty per cent in the last 12 months. Credit is not as interesting to banks as it was six to ten years ago."

Mambo is back on the table but how it can possibly compete with PayPal now is unclear. In four years PayPal has attracted well over five million active Australian customer accounts and has a global footprint.

"BPay's Mambo proposal is for a new internet-based payment application that in the future could conceivably be used in a shop with a PDA," said Chris Hamilton, chief executive of APCA yesterday.

Unfortunately for BPay, PayPal is already doing just that.

Ranasinghe is leaving the Australian MD job he took over from Andrew Pipolo late last year to become head of product for PayPal Asia Pacific in Singapore.

He will be replaced next week by Frerk-Malte Feller, who is the managing director of eBay/PayPal in Germany.