PayPal wants every Australian merchant

PayPal will sign up every single Australian merchant now selling anything online within the next couple of years, if the new managing director meets his goals.

Frerk-Malte Feller is the former head of eBay in Germany who has recently moved to Sydney to replace Dinuke Ranasinghe as the managing director of PayPal Australia.

Feller says while PayPal has excellent market traction amongst Australian online consumers compared with PayPal in Europe and other overseas markets, he wants to greatly improve take up by merchants.

"PayPal in Australia has the strongest or the second strongest market position globally. PayPal is very strong in the UK, and it is in these two markets where PayPal has the strongest consumer adoption rates.

"In Australia 27 per cent of online shoppers prefer to pay with PayPal, according to Nielsen, more than Visa or Mastercard or any other method and only in the UK do you see rates like that.

"We have good merchant take up here as well but we want more of course. I want to sign up every Australian online merchant and that is what we are aiming for."

Feller says joining promotions with merchants has worked well for PayPal recently and in the run to Christmas and beyond he wants to expand that to many more retailers.

Australian retailers are somewhat behind their counterparts in other markets in terms of their adoption of the online sales channel, says Feller.

"I am impressed with the range of government services available online in Australia and some market segments are very mature, such as online travel booking. But retail does lag behind the UK, the USA, Germany and other mature online markets.

"It is in personal daily needs shopping that Europe and some other overseas markets are really much more advanced than Australia; clothing, nappies, etcetera. So contrary to some market projections, I think we will see a lot of strong growth here over the next couple of years in those areas.

"About three per cent of retail spending is online in Australia, whereas in the USA and the UK it is between six and eight per cent. Australian online shoppers spend about US$1000 per year online but in these other markets shoppers are spending 50 to 100 per cent more per year."

Getting a complete view of the financial performance of PayPal in Australia is difficult.

The firm's statutory financial statements for the year to December 2008 show PayPal Australia increased its customer deposit base by more than 50 per cent in 2008 to $92 million from $60 million in 2007. Revenue, reported in the P&L, increased to $73 million in 2008 from $51 million the year before (and also the year when it was embroiled in controversy regarding a major failed eBay merchant and a stoush with the ACCC).

 PayPal has more than five million active accounts in Australia.