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Ebay Aims For Lead In Mobile Payments Race

Ebay is staking out its ground in the race to lead the mobile payments market, as large companies and start-ups alike compete to replace credit cards and cash registers with “mobile wallet” offerings.

PayPal, eBay’s payment arm, launched several new initiatives with large retailers and small businesses in the first quarter as the company moved to “define the future of money”, as John Donahoe, chief executive, put it.

“PayPal mobile payment volumes continue to be on fire,” he told analysts. “We see enormous opportunity for PayPal online, on mobile devices and increasingly, in the offline environment as well.”

Shares in eBay were up 6.6 per cent in after-hours trading on news that PayPal again helped the online marketplace beat analysts’ expectations for first-quarter earnings.

Revenue increased 29 per cent over the same quarter the year before to $3.3bn, ahead of Wall Street’s anticipated $3.15bn. Earnings per share rose 18 per cent to 55 cents on a diluted basis.

PayPal revenues increased 32 per cent to $1.3bn in the first quarter.

The unit launched several new payment offerings in the first quarter that it plans to test throughout the year, challenging similar experiments from Visa, American Express, Google and Square, a start-up in San Francisco.

It rolled out mobile payment capabilities to 2,000 Home Depot stores where customers can pay by reciting their mobile phone number and a pin code to the cashier. It has several other retailers under contract for the same system and is negotiating with several more, Mr Donahoe said.

It also launched PayPal Here, which is aimed at small businesses and merchants and includes a credit card reader that plugs into the jack of a cell phone and a mobile application that uses the phone’s camera to process credit cards and checks.

Ebay’s core marketplaces business, where people buy and sell items online, showed more modest growth, with revenues increasing 11 per cent to $1.7bn.

“Marketplaces has turned the corner, shifting from defence to offence,” Mr Donahoe said, adding that eBay had made the experience of shopping on the online site faster and easier, resulting in the addition of 2m users in the first quarter of the year.

He said the company was seeing a lot of user growth in emerging markets, where there are no local ecommerce sites. Users instead turn to eBay for its global market and cross-border trade, though sales between those markets and the US could be hampered by a copyright law that will be reviewed by the US Supreme Court this year.

In the US, eBay is experimenting with a new marketplace product that shoppers can use while watching television, called Watch with eBay. Users enter the television channel of the programme they are watching into their smartphone or tablet and eBay surfaces merchandise from its inventory that is featured in the programme.

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