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Online financial transaction service PayPal has grown from being a smart way to pay on eBay to a thriving global brand, but organised crime is still a threat to consumer trust. Jo Roberts reports
Many people know the joy of sitting at home, bidding on the eBay auction site for other people's unwanted goods. It has become an addictive pastime for some consumers and a business opportunity for others. The excitement of finding out that you have placed the winning hid for a coveted item appeals to both young and old. Individuals can purge their lofts and make a tidy sum, while small businesses can get expostire without taking on the risks of a highstreet storefront. For those people bidding and selling, an online payment system has become synonymous with the eBay experience: PayPal. ping area where all the firms that have signed up to PayPal are listed. Selected retail brands are highlighted, such as Ted Baker, because consimiers who opt to pay on the fashion website using the PayPal system get free postage. On some other shopping sites, customers can even claim cashback. Hodson explains the rationale of prohave the strength and depth of a tradi- moting retailers on its own site: "What tional financial services brand despite we're trying to do is tell people where its relatively young age. It reportedly they can use PayPal, so effectively it is processed $14bn (£7bn) of payments in our shop window. But we also realised that a lot of these retailers know we have its last quarter. Founded in 1998, it was "a pain in the a large [customer] base, so they want to backside" for eBay, according to Mark make offers to them as well." Hodson, marketing director for PayPal in the UK, until the auction site stopped Wider choice fighting the brand and acquired it in 2002. Monarch was the first airline in Europe It quickly replaced eBay's own propri- to sign a partnership with PayPal, introetary payment system, Billpoint. ducing the payment option in October Hodson says the relationship between 2007. Since then, it says it has seen the the online hrands is now symbiotic. He positive effects of teaming up with the explains: "There's an element of being brand. "It opens us up to new customers associated with eBay that helps but and offers more payment methods on our there's also an element that people liked website," says Ian Chambers, ecommerce PayPal itself - that's why eBay bought manager at the brand's online service, üy Monarch.com. us in the first place." "It's a policy at Monarch to match up The growth that the PayPal brand has enjoyed so far has been organic. But to with market leaders and pick the best. push the business forward and grow PayPal is a trusted brand, which lends the brand, transactional sites have been us credihility," Chambers adds. targeted and are being used as marketThe association with eBay has ing tools. undoubtedly opened doors for the brand, On PayPal's website, there's a shopmaking the name familiar in most housebrand strategy aprll 3008
PayPal's growth to date can be largely attributed to its relationship with eBay But the company is setting its sights beyond the auction site and hoping the success of that relationship can be replicated with other online brands and retailers. Companies such as Harrods department store. Boots the chemist and airline Monarch all have online transactional £ sites and have partnered with PayPal •2 to feature the payment method on their I websites. Building these relationships J is vital for the brand to maintain its a rapid growth. S With claims of more than 100 million i accounts worldwide, PayPal appears to
account was his.but when you're there and have been national consumers in its design: "It has through the process. going so far as to add that it can be beneficial not to be associated with a bank because customers associate them with unfair overdraft If you have a look at many other payment charges and bad customer service. says As a consumer.member' by thefirm. they often look quite American PayPal's strengths lie iîi its consumer." he claims." Marl( Hodson» marketing director. Shop without exposing your financial information r . you have a differa logo withfirst-classdesign standards. ent relationship with the brand ..that's why eBay bought us in the first place." lp to his bank account. Ensure that the extensions don't deviate from the core values of the brand.it • Key [earnings Young brands need to stay ahead by being innovative in order to grow the business. PayPal UK Privacy to Fight Idsnttty Th«ft I CHOOtE WHO TO PAT • MCIDE HOW TO PAT PAYMENT SENT 1 -*i. and says it's an ital marketing agency Twentysix: "It is arduous process to become a "verified very simple in terms of consumer us. an Integrated agency spe.- — 1 --"o PayPal website: emphasises its ease of use for buying goods and sending money. photocopy a stateRob Oubridge. keep your customers informed.PayPal for a while. It's a fantastic enabling brand. Look at what they're PayPal saying . security of transactions and tools for eBay vendors holds. systems.He had to transfer ability. "There's an aspect to PayPal of being a challenger brand.instead of hiding this fact.. bnnd strategy april 1008 . Paying for items online can carry risks . Oubridge has used Matt Pallatt.perhaps they're telling you about a problem that needs solving. managing director of ment and send it off to prove that the Aqueduct. cialising in digital media. technology director at dig. retailers were not so keen to do business with a non-bank payment service provider.and PayPal has managed to avoid that. Hudson reveals that when the brand was establishing itself. Be prepared for the reality that some people will dislike your brand and will be vocat about it. Being transparent means your customers will know where they stand. We're changing the way that people see financial institutions. However. he feels that PayPal has proved that a reputation in the finance sector can be built without being linked to a traditional banking institution. comments that "It's a pain and consumer unfriendly the marque is very appealing for inter." friendly service and functionality.PayPal "There's an element of being associated with eBay that helps but there's also an element that people liked PayPal itself . Brand extensions are a way of growing the brand and targeting a wider audience.
660 3. along with others in the sector. Securetrading io. But the brand claims it has worked hard to combat security issues and recent figures suggest that the work being done is achieving results. according to the payments association APACS. If there is no company signature. Dan Levy." But the belief that PayPal could be sending these emails is damaging for the brand. and without that trust element there wouldn't be a PayPal brand.677 2. WorldPay 3. head of European risl^ management. Another example of working with the industry is the way in which web browsers such as Microsoft and Mozilla's Firefox now have a system in place that flags up websites that look like phishing sites. Barctaycard 5.19« 3. Phishing emails have blighted the reputation of online shopping in general something that PayPal is very aware of. even when he's not working.588 2.121 1. Google Checifout 5. Legal ft General 6.066 426 301 It. PayPal PayPal statistics Retailers that have recently signed up to offering PayPal as a payment option include: i i DatingDirect i » EA Sports i Í Chain Reaction Cycles * Flowers Direct > Empire Direct •4 becomes your brand. head of European risk management at PayPal." The firm has worked with eBay and email provider Yahoo! to come up with an email-signing standard. PayPal 2.com 3.Case study PayPal "People tell me: M get a bunch of emails from PayPal. Money Saving Expert 10. GiroBank BiUpay 8.989 3. The biggest threat to PayPal is PayPal. He laughs: "Even my mum knows brand strategy aprll 2008 . Barclays 4. BIBiT 6.196 1. He argues: "You need that level of trust online because the online world is seen as a quasi dangerous environment. Other figures show that across the industry. a security i 1 Dabs i 1 Maplin 1 Vlagogo Nielsen Online Statistics unique audience (ooo! 1. NatWest 9. to reduce the occurrence of scams and boost consumer confidence: "We realised that the best thing we could do with consumers is to actually prevent the phishing email from coming into their inbox. PayPal's Levy explains what the firm has been doing.150 2. often unsophisticated emails and press delete.secpay. Protx 5.695 Unique audience for online payment systems (000) 1.0*4 2. says fraudsters posing as the brand are a big challenge and he is often faced with diíTicult questions. NetBanx 9. according to Sophos. says Oubridge. In the UK. MoneySupermarl(et. Halifax 8. PayPal 2." Dan Levy." Damage from scammers Unfortunately. Lloyds TSB 5. While most will read these fake. The percentage of messages pretending to be from eBay or PayPal dropped in September 2007from85% to 21%. this trust and credibility is continually challenged by the deluge of phishing emails that have arrived in people's inboxes across the world under the guise of PayPal.953 2. there's always the desire to innovate. HSBC 7. But Paltatt admits he is amazed at the ievel of penetration it has already achieved. Having such a stringent system makes you feel secure with the brand. Levy says PayPal wants to be the leader in internet security and argues that working with others in the industry on security issues can only build trust in consumers' eyes. the message is immediately deleted and never reaches the intended consumer's inbox. a warning willflashup.' None of those emails are coming from PayPal but from fraudsters sitting somewhere else. So even if customers do click on a fake PayPal link. it only allows messages into inboxes if the email is authentic. LocalBilling 7." He says the brand will also have to continue to be consumer-friendly and approachable to retain its appeal. online fraud is decreasing. the brand needs to continue to drive its proposition forward: "In the online industry.com 178 1*3 150 143 120 firm that monitors spam and phishing emails. it is down by 33%. Twentysix's Pallatt says that to remain in a dominant position. He says: "I'll be walking around at a social event on a Saturday night and people come up to me and say: 'I get a bunch of emails from PayPal. saying that my account's been taken over/ None of those emails are coming from PayPal but from fraudsters sitting somewhere else. so when Yahoo! processes mail." he explains. saying that my account's been taken over. a few will convince themselves that they bid for an item on eBay under the haze of a bottle of pinot grigio and click onto a fraudulent PayPal site to put money into the hands of criminals.
Alex Burmaster. He even compares PayPal's dominance with the search engine's success: "The brand has struck a chord with the moment. PayPal will have to be even more innovative to keep ahead and retain its dominant position. European internet analyst at Nielsen Online. But Hodson says being a market leader brings with it a recognisable identity that is subject to criticism. this isn't so commonplace. PayPal's Levy says the approach to trust and security has to be tailored to suit different cultures." With online competitors such as Google snapping at its heels." explains Hodson. PayPal is consistentlyfivetimes as popular as the business in second place." says Hodson. It considers issues such as how consumers want to use the internet and pay for items." The ahility to add further elements. and how to make their experience safer and more interesting. for stock going missing out of the back door . Keeping up Hodson suggests that as technological advances change the way the internet is used. propositions and retail partnerships will remain imperative to the brand's continued success. It's about making sure that people who want to can use PayPal offline as well. "People felt that they had a strong affinity with PayPal and wanted to use it when they did their shopping at Tesco or when they paid for their petrol. which is Worldpay. "It's about letting people know that seUing online can be quite risky. says the PayPal brand is consistently the most trusted financial payment system on the internet and that competitors have failed to have much impact." The fact that Google hasn't dented PayPal's success comes as a surprise to Aqueduct's Ouhridge. but PayPal likes to see itself as more than that.com. The fact that PayPal is an intrinsic part of that website is the reason why it's so dominant. Midwest Airlines. "It's a very stable category. in the same way as selling in a shop can be quite risky. Hodson laughs at the mention of the name and jokes: "Argh! My favourite website!" This thorn in PayPal's side subjects a so-called trusted name to a vast amount of brand bashing. But PayPal isn't without its critics.PayPal Case study about PayPal . people regularly give out their bank account details to complete strangers so they can make payments. Levy adds that in Germany." Hodson claims that the core of the PayPal brand rests on innovation." he admits. he adds that many companies are solely about driving revenue. which is quite Google-like. Security issues vary from country to country and different security needs have t)een identified across Europe." PayPal's Hodson says that although an eye is kept on the internet giant. hasn't made much of an impact. a payment system launched last year by the ubiquitous search engine. Hodson insists: "One thing we would never do is try to shut down PayPal Sucks. where negative news and views are posted. "There was a lot of awareness and trepidation when Google Checkout launched.com ~riiiTTM rlitlr tication to make banking payments so PayPal has introduced a security key that generates a random six-digit code. adding: "I don't want to be completely dismissive because it's a big company with very deep pockets. the financial firm hasn't yet worked out how it is going to achieve this goal. He notes: "eBay is the most engaging brand online. the additional competition isn't as worrying as he first thought. how can we help to make transactions between peopie even more effective? There's always going to be somebody who owes somebody money" While the thinking is there.com and BabyUniverse. PayPal is looking at ways to utilise its services for people-to-people transactions. But there's little doubt that Google is a brand that can invest." he adds.it's the same as online.and she can barely turn on the computer. "In the near future. He says: "The advance of the abilities of mobile and the speed at which people can surf the net is going to have a big impact on how users are going to use their mobile phones." he comments. an anti-PayPal website. He remaries: "Our ethos is: 'How can we meet the needs of people?' " While conceding that this is a cheesy line. PayPal is aiming to build its revenues by stepping offline into the physicai world with a PayPal credit card. PayPal needs to make sure that consumers keep buying into its proposition so it can cash in on its reputation as the dominant consumer payment system in the online world. Burmaster isn't surprised that Google Checkout. Despite the damage this anti-PayPal site could wreak on its brand." he says. PayPal Sucks is. Various 'horror' stories are shared and endless gripes are discussed on its forums. • . In the UK." Realistic view of risks He believes that openness and educating customers to be streetwise online are the keys to combating negative attitudes. YitaCost. "If we're upfront about those dangers then people are much less likely to get hurt. This aims to make Germans feel more secure ahout using PayPal and the company is still assessing whether UK consumers require this type of security key. people are used to having a second level of authenbnn<t strategy apiit 200S Get busy with these springtinne deals Enjoy 10% to 20% savings on top brands W^ Partnership deals: businesses currently running special offers with PayPal in the US include CompUSA. You have got to look out for shoplifters. To take the brand forward. "In Germany. as the name suggests. Northwest Airlines.
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