Commentary

Friday Five: What Will Keep David Marcus Up at Night?

Amazing news out of eBay today with the appointment of David Marcus as the new President of PayPal. As most anyone who has been living on Planet Earth for the last year knows, David is the Founder of Zong, the mobile payments app for gaming and digital goods acquired by PayPal last summer. David is a serial entrepreneur with a history of starting (or advising) companies, commercializing them and then having then acquired by larger players: GTN Telecom (acquired by World Access) echo6 (acquired by m6), Punch’d (acquired by Google), Zong (acquired by PayPal). There was another company in there too- Echovox – which spawned Zong. And did I mention that he did all of this in the last 11 years? It’s a pretty impressive track record.

All of the news reports point to David’s entrepreneurial spirit and track record as key to his appointment as CEO. I would add, that it obviously has a lot to do with his deep experience with and knowledge of the mobile space and PayPal’s enormous emphasis on the mobile/IP-enabled channel as the key to its future. Judging by his experience over the last decade, David has seen mobile from almost every angle – the gnarly side of telco infrastructure and carrier dynamics, the fickle side of consumer experience and adoption, the technical side of apps development and deployment, the lean and mean side of a start up and money side of crafting business models that drive profits. And, he acquired all of that experience as the IP-enablement of everything was just staring to evolve and explode – in the early to mid 2000’s so his knowledge base is fresh and I would imagine his relationships across the ecosystem still relatively current.

All of that said, David has his work cut out for him. PayPal is closely watched by everyone – incumbent payments networks and alternative ones alike.The mobile and IP enablement of the world – the very one he knows so well – is compressing the time to market for all players. Speed to market is critical as is carving out a differentiated place in that market. Mobile is still young, in payments, anyway, and even in its youth, a lot of what is being innovated is starting to look a little too “me too”. And, PayPal’s payments innovations aren’t all about the mobile channel. There’s plenty about what its doing on and offline that has little to do with the mobile device – the offline world, in particular, is brand new territory for David, as is the complicated world of payments, by and large. That aspect of the business – which is pretty core to PayPal’s success – isn’t all that easy to learn.

So, then, If I were he, here are the 5 big questions that I’d be losing sleep over starting tonight.

1. How do I accelerate the large merchant adoption of PayPal as a tender type?

2. What’s the right business model (and product set) for the small business segment so that they deliver both transaction volume and profits?

3. What is PayPal’s international sweet spot and how much emphasis should be put there in the next 2 -3 years?

4. What will it take for consumers to establish preference for PayPal as a preferred payment type across all commerce channels?

5. What’s the best and quickest way to leverage the massive Facebook Credits/Zong asset?

PayPal is an organization on the move. It’s cranking out innovation at every turn. As it is well reported, its 7 month “idea to execution” lifecycle of PayPal Here is evidence of the pace at which the organization is moving – that was concurrent with its physical store POS announcement with Home Depot and the launch of its mobile wallet.

It’s also an organization chock full of talented people from across the payments and technology landscapes. It is executing against a strategic playbook designed to move PayPal from online payments mark to connected commerce leader – after all, they acquired Zong, along with several other key companies and executives central to the integrated commerce experience for merchants and consumers that we are seeing play out in the marketplace today. The five questions above, and there are more, and how David leads his team thru those issues, will influence the impact PayPal will have on payments moving forward.


We’ve had a lot to say about PayPal lately — and so have our readers. As eBay’s payment subsidiary moves forward with a new leader, we thought it pertinent to aggregate reader commentary on PayPal’s moves to this point. We present a selection of those comments below.

“If PayPal manages to orchestrate holistically all of its parts, then it could disrupt in the merchant BOP segment. Although Square already has a significant presence in this segment, PayPal on the other side has the comparative advantage of its own payment network and method, that considering the low-switching costs for the merchant becomes in a real threat for Square, and of course for other POS providers.”
Posted by Juan Carlos Consiglieri

“My guess is they will do okay with [Here]. Not as great as Square, I don’t think, as Square grabbed a good portion of the market, but we’ll have to see. There’s a lot more PayPal users already for them to advertise to with a simple email!”
Posted by David Durick

“PayPal’s rates are still super high for anyone with a brick and mortar store that wants to add on the ability to do mobile payments. PayPal is doing a lot to expand (Home Depot, PayPal Here, etc.). It makes you wonder if they are just looking for more revenue streams or if their core business is changing.”
Posted by Steven Blentlinger, LEED AP, HCC

“I think PayPal will hit a home run here. Just my opinion. And I’m guessing once chip-and-pin matters in the U.S., they will have that too. Gotta love PayPal…”
Posted by Payment Professional

“Yep, it looks like everybody is getting into this business. I personally believe there will be many more companies getting into this business, because at 2.7% you can make a big win. Even with just a handful of customers. I just can’t understand why MasterCard and Visa are opening all doors to get more fraud… But I am European, which is probably why I don’t understand.”
Posted by Daniel Eckstein

“From a business’s perspective, why would any merchant accept PayPal’s rates when they’re paying 20-25 points above interchange? From an acquirer’s perspective, why would any acquirer in their right mind allow PayPal to cut into their card processing revenues?PayPal is decent for ecommerce. It should stick to ecommerce. This is only going to fragment the market even more.”
Posted by Gerald Xiou

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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