PayPal looks to mobile payments

Online payment service provider PayPal reported yesterday that its account holders were moving to mobile commerce. Of its 3.6 million active account holders, 400,000 made a mobile transaction last year.

The numbers are small, but the growth rate is very high. PayPal processed A$2.7 million worth of payments made on iPhones and other mobile devices in 2009. Last year it processed $42 million of payments - a 14-fold increase.

It is rare for PayPal to divulge any data on its business in Australia. It did so yesterday in the context of a public relations announcement about research commissioned from Nielsen Research. This reported on the mobile commerce market in Australia.

"There is a real change in consumer preference going on," said PayPal Australia's managing director, Frerk-Malte Feller. "Increasingly, mobile devices are transaction devices."

Nielsen Research reported yesterday that the total mobile commerce market in 2010 was worth $155 million. This is still a small fraction of the total online retail spend, which Nielsen put at $27 billion last year and said was likely to grow to $37 billion in 2013.

"Twelve per cent of Australia's online shoppers transacted through mobile in 2010," said Lillian Zrim, Nielsen Online's senior research manager.

"People told us they used mobile because it was fast and secure."

Surprisingly, 64 per cent of mobile transactions were made in the home, and 36 per cent at work - places where a computer would usually be found.

Nielsen found that 38 per cent of consumers were not comfortable using a mobile phone for a purchase. They were put off by concerns about security, slow response times and the small screen of the device.

PayPal also announced yesterday that it had finalised an agreement to supply payment services to Jetstar for its online booking service.