With eBay (NASDAQ:EBAY) now integrating PayPal into its RedLaser smartphone app, [1] users would now be able to shop directly on their app instead of actually paying for it at the counter. This can prove to be a significant threat to Google’s (NASDAQ:GOOG) own foray into the mobile payment space – the Google Wallet.
We currently have a price estimate of $39 for eBay’s stock, which is about 15% above the current market price.
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PayPal Has Both Scale and Technology Advantages
The RedLaser app enables smartphone users to quickly scan product bar-codes. While the app itself was acquired by eBay in June 2010, [2] it has so far been used mostly as a comparison shopping tool i.e. checking price listings for the scanned bar-code on eBay’s marketplaces.
However, the upgraded feature of directly paying through PayPal after scanning the code is a significant competitive advantage in the mobile payments space. Firstly, the technology itself does not need a near-field communication (NFC)-based smartphone, which is currently a constraint for Google Wallet. Secondly, given that PayPal has already crossed a 100 million registered accounts, [3] eBay already has sufficient presence in the mobile payment segment. On the other hand, Google Wallet is still in progress to build its scale through partnerships with credit card companies such as MasterCard and Citibank.
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