[panarky]

PayPal and eBay are hugely vulnerable. They've underinvested in infrastructure, their technology is old, and they've become slow and bureaucratic. Worst of all, their ideas are stale and the user experience is dreadful.

PayPal's fat margins aren't justified by the service they provide, only by the lack of alternatives. But new alternatives are launching much faster than eBay can respond.

Square has become a well-run, genuine alternative. BitPay / Coinbase are still very small, but the cryptocurrency wildcard at least shines a light on what money transfer should cost.

Amazon is quietly expanding their payments footprint. The famous Bezos quote seems appropriate here: "Your margins are my opportunity."

Apple exposing their Touch ID API will level the playing field, exposing PayPal to more competition and margin pressure. Look out if Apple starts using their billion-credit-card database to get into payments themselves.

If Facebook/Whatsapp can payment-enable messaging and do it at a lower cost, PayPal's raison d'etre starts looking pretty questionable.

And now eBay leaking personally-identifiable information on 150 million customers isn't helping maintain trust or brand image. The breach couldn't have happened at a worse time.

We could be looking at the Blockbusterization of eBay and PayPal. The stock price is starting to reflect this reality, so look for more key people to leave in coming months.

[rtx]

So why are there no alternatives to Paypal. It's been fifteen years. Cost you are talking about is in built in money transfer business. Fraud prevention alone will kill most of the start-ups.

[LandoCalrissian]

Square, Stripe and maybe even Coinbase to an extent. You could even throw in Amazon payments and Google wallet as well. They are in a tough spot, and their brand is always taking damage from how they run things.

I think they will die from not one big dog taking over, but a bunch of smaller companies each taking bites out of their market share.

[samstave]

I am awaiting the announcement of SquareCash or CryptoStripe - where you have a walled currency garden where those participating in the Square or Stripe ecosystem can start generating CompanyCredits with which to spend within the ecosystem.

How would the valuation to user actually function?

Would one allot some % of their transactions to Square (above both fee and margins) into the pool. Then they earn various mechanisms to increase their pool share (including buy some/debting some from square) and then be able to use all of it as in-system credit? Where goods and services were exempt from taxation due to there being no "actual US currency transacted"?

It would be very interesting to see if such a system results in the truth that labor-resource is the true vector of tax - not money. Unless that is already established and I am just ignorant....

[rehabindian]

|If Facebook/Whatsapp can payment-enable messaging and do it at a lower cost, PayPal's raison d'etre starts looking pretty questionable.

PayPal's raison d'etre is not in Peer to Peer money exchange. Its more on strong merchant integrations, partnerships, and relationships. In fact PayPal draws a small loss on p2p products. If you want to compete with PayPal its through strong merchant integrations which many startups have not succeeded in doing. When braintree made inroads into a segment of b2b products, PayPal acquired Braintree.

P2P is more or less a adoption hack/growth hack for a payments company. Merchant integrations and risk models are where its at.

[nostromo]

Yes, I think Ebay will die by a thousand cuts.

There won't be one grand disruption (except maybe Amazon or Alibaba), but there will be many small vertical disruptions, like Etsy.

The real question is why Facebook is poaching from EBay and not vice versa.

[irtefa]

Because they are failing to understand the importance of having smart people on board. I did an internship over there few months back. People are generally not motivated. They have below par hiring practices, especially in engineering.

[panarky]

As you were posting this ...

  Another Exec Is Leaving PayPal: Senior Engineering Director
  April Chang Goes To Eventbrite

http://www.businessinsider.com/another-exec-leaving-paypal-a...

[boling11]

I agree with most of this post, except square and paypal play in pretty separate parts of the payments ecosystem. Square isn't at all competitive with PayPal's core business atm.