PayPal Says Mobile Payments To Hit $3 Billion – Digits – WSJ

PayPal says it will process $3 billion in mobile-device payments this year, up from the company’s previous projection of $2 billion.

The online payments service, which is owned by eBay, had projected last fall that it would process $1.5 billion in 2011. It raised that projection by half a billion earlier this year before releasing the latest figure Thursday.

“Every week I look at the numbers, I get a sense of surprise,” said Laura Chambers, PayPal’s head of mobile. She says the increased mobile transactions are due to more smartphone adoption and familiarity with PayPal.

The $3 billion in mobile payments can be broken down into two categories. The first is individuals using PayPal’s mobile app to transfer money to each other. The company doesn’t make any money on this feature, except for cross-border transactions that carry a small fee.

The second category is people completing purchases on mobile online-commerce sites using PayPal. The company collects a fee for each sale through PayPal.

Chambers declined to say how much of the $3 billion estimate came from which category.

The service also says it now has eight million users and is seeing $10 million a day in mobile total payment volume.

PayPal has helped power the growth of eBay, which has struggled to turn around its core marketplace business. The payments service grew 23% in the first quarter and accounted for $992 million, or nearly 40%, of eBay’s revenue. EBay CEO John Donahoe has said PayPal could become the company’s biggest business in a few years.

But PayPal faces challenges from competitors that include Google and Square, as well as credit-card companies. Google last month launched Google Wallet, which is designed to let people pay for items using smartphones.

EBay last month sued Google over its mobile-payments system, alleging that the Internet-search giant used PayPal-developed trade secrets.

Google has also said that it won’t allow outside developers, such as PayPal, to create products for Google Wallet until later.

Chambers said that in the mobile-payments industry, the people that matter “are the customers and merchants” and that any solution from Google “that’s going to be too closed isn’t going to work for them.”