As more and more of our payments are conducted online, we begin to say goodbye to old fashioned paper and coin transactions. Electronic payment processing has become the ultimate transaction - numbers simply disappear from one financial record and appear on someone else's. The idea of physical money is certainly under threat - but the idea of money itself is stronger than ever.
The most successful payment processing company today is Paypal, which facilitates the buying of goods and services across the net. It makes money by charging a percentage fee on the incoming amount. It was bought by eBay in October 2002 for 1 and a half billion dollars. As it was already facilitating 50 percent of eBay transactions, it was natural for eBay to gain control of this hugely lucrative part of their business.
As Paypal has become more popular eBay has sought to remove other forms of payment from its auctions. In Australia and the United Kingdom, eBay insists upon everyone offering payment processing by Paypal. So Paypal are trying to usher out cheques, bank transfers and postal orders - and make themselves a colossal amount of money. Although this may be an inconvenience to many (especially the vendors who are frequently forced to pay the substantial fees) it is designed to protect the buyer, so that all purchases are guaranteed - and equally that sellers know they will get their cash.
These stringent rules were relaxed in Australia, where eBay allowed other forms of payment processing - but as long as Paypal was an option. It might reasonably asked why the United Kingdom is subject to such particularly strict rules under eBay and Paypal. It is known that the UK has a very large eBay economy - in fact at one point it had the largest number of people making a living on eBay in the world.
Payment processing has come a long way since it began in the late 1990s, and like so many economies, only one company has got to the top of the pile. It seems that the consuming public tend to get attached to certain brands in order to make life easier - and Paypal has got itself into the enviable position of becoming an almost institutional financial services company. It has got to this stage largely on the back of monopolising the electronic payment processing area of eBay. Whatever people think of Paypal, one thing is certain, that it will remain in a commanding position no matter which company tries to challenge it.
The only conceivable way that another payment system could become so globally used, is arguably if another auction site could mount a challenge to eBay - which given the wealth of experience behind them is quite unlikely. The amount of time and money required to build a comparable auction site and come up with extremely powerful marketing campaign to prize people away from eBay's vice like grip on the market. Yahoo! Auctions attempted to compete in the USA and Europe, but ultimately failed and closed down. It still offers some services in Asia, however. A payment processing service which can 'piggy back' a business venture such as this may be able to take some business from Paypal over time.
Author Resource:-
Anna Stenning is an expert in payment processing having been involved in the business for many years.
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