An interesting read from Chris Skinner at Finextra.com tells the story of how PayPal got started, just over eight years ago. One of the key interesting themes here is that PayPal created their service in full view of the banks, and uses a lot of the same infrastructure.
Mr. Skinner says that PayPal worked where other new payment schemes failed (such as Beenz) because of three vital differences:
- it used the dollar as its medium of exchange, rather than trying to create a new currency for online payments;
- it used email for communications; and
- it used the existing bank networks for making the payment
PayPal is now a huge operation, recording 2006 revenues of $1.4 billion on almost $38 billion in transaction volume. Although their growth rate in transaction volume is slowing, it is still massive: 45 per cent in 2005 and 37 peer cent in 2006.
Well worth reading, and very thought provoking.