eBay Takes Aim at Mobile Card Payments

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- Paypal, the leading global payment service owned by eBay ( EBAY), has finally launched its own mobile payment solution: PayPay Here.

With Paypal Here, eBay is gunning for Square, a mobile payments startup which has seen exponential growth in the last year and has seen its payments volume reach a nearly $4 billion run rate. Paypal Here enables small businesses to accept credit and debit card payments using its card reader and app.

Paypal, the dominant online payments processor, has been building its presence in the mobile payments space, but previously didn't have any credit/debit card payments offering in the market, especially for small businesses.

Check out our complete analysis of eBay here.

eBay is trying to woo merchants by offering a lower transaction fee -- 2.7% compared to Square's 2.75%, and is also offering 1% cash back. Like Square, it will give away the mobile payment dongle and the application.

In addition, it will offer geolocation enabled payments, which use the customer's location data to detect and authorize payments at supported merchants. Alternatively, merchants can use the Paypal app without the card reader to accept payments by using their phone's camera to scan customer credit cards.

With Paypal Here, eBay is making a bold move to enter the mobile payments market and grab market share from Square. Given Paypal's massive presence in the online payments space, there is a good chance that it will succeed. The mobile payments market is expected to grow to $200o billion by 2015, up from $16 billion in 2010.

Paypal is eBay's second most valuable business, and accounts for nearly 27% of eBay's $42 Trefis price estimate, which stands nearly 10% above its market price.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.