Why Is eBay Launching Its India Payment Service In Other International Markets?

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Reports suggest that eBay (NASDAQ:EBAY) plans to launch its Indian payment service PaisaPay in some of its other international markets. This marks a turn since its split with Paypal, which traditionally handled the payments aspect of transactions done on eBay’s platform.  Now the marketplace company is to launch an internally developed payments solution on a large scale. PaisaPay is a ‘trust infrastructure’, developed specifically for the Indian market.  The payments platform allows buyers to transfer money to a temporary escrow account until they receive the product.  It then releases payment to the seller once the receipt of the product is confirmed. eBay believes that there are other countries in the world which require a similar payment platform.  The expansion of PaisaPay to these other geographies should strengthen the company’s business in these regions.

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Customized Products For Emerging Markets Can Boost Growth

As a part of its transformation program, eBay is focusing on technology initiatives to improve its platform both for buyers and sellers. The company is planning to roll out a new registration process and an easier way to sign up users on smartphones. In the era of mobile phones, eBay believes it needs to innovate with user identity and passwords to increase ease of use and convenience for its customers. The PaisaPay solution aims to provide an effective payments infrastructure outside of PayPal, aimed at the specific requirements of emerging countries.  The company’s management stated that even though eBay is still a huge supporter of PayPal, it believes that there are opportunities to expand beyond the PayPal infrastructure, opportunities the company plans to exploit.  Trust is an important element for a marketplace to establish itself in regions such as India. PaisaPay has ensured that customers on the eBay platform ‘trust’ the website while buying or selling on its platform. Expanding this product to other regions will allow eBay to address similar needs in other countries, thus attracting and retaining market share.

While eBay had the first mover’s advantage in India, it lost market share to new local entrants such as Flipkart and Snapdeal and is now struggling to re-establish its position in India’s e-commerce market. Emerging markets hold strong growth potential for the company.  If it is able to execute its transformation plan effectively, these regions can be strong revenue drivers for eBay.  According to a Credit Suisse survey, e-commerce as a share of total retail sales may soon be larger in emerging markets than in developed countries. Total annual retail sales across the markets surveyed by Credit Suisse (Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Turkey) could reach up to 3.5 trillion U.S. dollars as internet access rises rapidly in these regions and disposable incomes expand. The survey also found that these regions could add nearly 1 billion online shoppers as internet usage rises to the levels in developed nations.

While a trust-based payment platform can be an important element for eBay’s marketplace to succeed in emerging markets, other technological improvements, especially on  product cataloging, will be extremely important for the company to gain market share in these regions.