PayPal Opens up New Frontiers for Carrier Payments

There’s plenty of news coming out of Mobile World Congress and eBay Inc CEO John Donahoe announced today that PayPal is launching the PayPal Carrier Payment Network, a strategic initiative to make mobile carrier payments more viable for a wider number of online merchants. Through Zong’s and PayPal’s extensive carrier relationships, PayPal’s network of millions of merchants, and 106 million active customers, we are working to build a standard for carrier payments that benefits not only the carriers but also more merchants and consumers.

Historically, carrier payment has been utilized primarily by online game developers and publishers to provide a fast and easy way for users to purchase goods directly in-app or in-game. While convenient for consumers, this method of payment has inherent challenges for other digital goods merchants – such as digital books, music, dating and content – to adopt as a primary payment method. Among the challenges is the cost of doing business – sometimes upwards of 40 percent – since transactions are processed through the carrier, merchants must share part of their revenue.

Additionally, carriers typically have a dollar amount limit on payments that can be processed over a specific period of time, making it difficult for merchants to maximize their profits.

The initiative will require that carriers revise standards to help optimize user experience, increase flexibility of carrier payments as a payment method, and increase payout rates for merchants, allowing carrier payments to address the entire digital goods industry, which is expected to grow to $220 billion by 2014 according to Juniper Research.

PayPal will continue its ongoing work with its 250+ carriers and 1,500+ digital goods merchants to expand the carrier payment experience and create a win-win situation for everyone. With this new initiative, carriers can expect to leverage PayPal’s expertise in mobile payments and digital goods, our vast network of merchant partners and our well-established back-end technology. Merchants will find more ways to monetize their users by offering additional frictionless payment methods. And, of course, both carriers and merchants will benefit from tapping into the four billion consumers worldwide that have access to a mobile phone, but not necessarily a credit card or bank account.