PayPal Merchant Services Case Solution

Case Solution

At the outset of 2006, PayPal management is identifying how to resolve Google's entry into online obligations. PayPal, possessed by eBay, has specific online merchants outdoors eBay's auction community due to its next wave of expansion. Google signifies a potential threat to PayPal's off eBay strategy, much like incumbent bank card companies. PayPal management must decide if to enhance acquisition of its off eBay strategy the best way to allocate possibilities forward and backward sides of the payment network (i.e., clients and merchants) which consumer segments to pay attention to (e.g., existing PayPal clients versus. new clients) which types of merchants to recruit (e.g., large versus. small) along with what changes to produce to prices terms and product features.

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Questions Covered

What explains PayPal’s early success? Discuss the role of PayPal’s strategy in its success, as well as the role of decisions by actual and potential competitors.

How vulnerable are Visa and MasterCard to share erosion in e-commerce payments due to PayPal’s off-eBay expansion? What, if anything, should the card associations and their members do about PayPal’s off-eBay initiative?

What strategy should PayPal pursue for Merchant Services? How should PayPal allocate investments between efforts to grow the merchant side and the consumer side of its platform?

Does Google Checkout represent a serious threat to PayPal? What, if anything, should eBay/PayPal do to defend themselves against Google?