Continuing with eBay’s (NASDAQ:EBAY) strategy to expand into offline payments, PayPal will now make its debut in restaurants and bars in around 400 locations in the U.S.  This has come about through a partnership with start-up Tabbedout, which lets people maintain their tabs through an app. With PayPal already planning to have in-store payment platforms in 2,000 Home Depot stores,  2012 could see eBay generating sizable revenues through offline payments as well. eBay competes in the e-commerce space with companies like Amazon (NASDAQ:AMZN) and Alibaba.
PayPal Can Generate More Revenue Per User
PayPal’s latest integration with Tabbedout aligns perfectly with eBay’s divergent strategy as compared to Amazon, with the former steadily reducing reliance on its Marketplaces to generate revenue. While this may not directly increase the scale of Paypal’s users, it will certainly prompt a user to utilize PayPal as a preferred mode of payment for in-store sales as well. This will provide direct upside to the payments per account for PayPal, increasing revenues as a result. However, this also places PayPal head-on with incumbent competitors like MasterCard, Visa and American Express, which are aggressively building mobile payment platforms.  In short, the boundary lines of offline/online payments in the market could soon cease to exist.
We currently have a price estimate of around $41 for eBay’s stock, which is about 18% above the current market price.