It appears PayPal has identified the potential market growth it could have by partnering up with mobile money services especially in emerging markets.
“We have a tremendous opportunity to transform commerce and financial services, and mobile is at the center of that evolution. We are committed to giving people flexibility and choice in the ways they move and manage their money,” said Dan Schulman, President & CEO at PayPal.
PayPal is a pretty popular online money transfer services, but it is restricted to the North America and European markets; except for only a handful of other countries outside these markets. Most emerging markets in Africa, Middle East, and Asia are locked out from PayPal services. The payment service has some international money transfer standards that are yet to be met by most of the financial services in the countries currently locked out of PayPal withdrawal services.
Thus entrepreneurs transacting via PayPal in these locked out countries, have to find workarounds to withdrawing their money. They use the services of middlemen to whom they ‘sell their PayPal balance’ and in exchange given their The end effect is that legitimate entrepreneurs in these emerging markets, doing their domestic currency.
More often than not, these entrepreneurs get exploited since they first pay the PayPal withdrawal fees; then the middlemen exchange their PayPal balance with local currency at rates not favoring the entrepreneurs. The end effect, cost of transacting via PayPal becomes very exploitative and expensive to the entrepreneurs.
However, there seems to be a ray of hope for these entrepreneurs albeit it is still at the far end of the tunnel. PayPal has announced its collaboration with Vodafone, one of Europe’s biggest mobile carriers. Europe has got millions of PayPal users, and thanks to this partnership they will now be able to send money from their PayPal accounts to their Vodafone wallets on their smartphones. They can then make payments at Visa contactless terminals using the Near Field Communication (NFC) feature on their smartphones.
This service will be first rolled out in Spain and later in the year extended to the other European markets. PayPal has also collaborated with leading mobile carriers in Mexico and Brazil; Telcel and Claro respectively. The partnership will enable users in these South American countries send money from their PayPal accounts to their mobile wallets.
PayPal-to-mobile wallet service will find a good market given the fact that currently, about 140 million active users are transacting daily via mobile wallets. PayPal’s has a vision to implementing the democratization of financial services and make moving money accessible to more people around the globe.
In that spirit, PayPal’s recent acquisition Xoom is said to be working on expanding its services into the African market. This move will make it easier for PayPal users in Kenya to withdraw their money from PayPal to their mobile wallets (M-Pesa, Airtel Money, etc.) via the Xoom services. The same goes for PayPal users in other African countries with their respective mobile money services.