With more than 50 million registered users, the PayPal customer base is already more than half the size of global retail banking giants like Citigroup and HSBC. In fact, PayPal has chased those very banks out of the online payment service business: HSBC and partner Yahoo! quit the game last week, just as Citigroup did last year.

In "PayPal Dominates The UK's New Payments Market," Benjamin Ensor takes a look at how PayPal has come to dominate alternative online payments in the UK, Europe's largest online retail market. One in five UK Net users has used an alternative payment system like PayPal this year (see the figure to the right). PayPal has come to dominate because its tight integration with eBay's auction listings gives PayPal the "must-have" content that persuades consumers to sign up.

Electronic Payments Are Finally Taking Off
In Canada, epost's acquisition of its rival webdoxs will create similar critical mass for electronic bill payment and presentment (EBPP). A single EBPP network for Canada will offer Canadian consumers 70% of their bills online.

EBPP has been slower to catch fire in the US. But as Cathy Graeber notes in part two of her "Online Banking And Bill Pay 2004" series, bill pay holdouts do eventually become comfortable with the idea of online payments as they gain online tenure.

Of course, it's not just consumers who benefit from electronic presentment and payment. In "EIPP: Don't Be Left Behind; Reap The Benefits," Penny Gillespie shows how companies save millions in processing costs and improve their business decisions thanks to the consolidation of payments data.

What Can Other Firms Learn From These Successes?
For this edition of First Look, Benjamin Ensor selected three points to highlight from our research. First, seamless integration drives adoption by making life easy for the payer. Second, nothing succeeds like success: The critical mass that PayPal is building in the US, UK, and elsewhere in Europe creates a virtuous circle of consumer and merchant interest, while giving PayPal an unassailable position. And third, good things come to those who wait: Many consumers inevitably warm up to electronic payments over time.


Got feedback?

As the research director for Forrester's financial services research, I am very interested in your feedback on our research. Do you have topics to recommend, data you need, or technologies you want assessed? Drop me a line at billdoyle@forrester.com so we can connect.


Bill Doyle
Financial Services Research Director

Research Referenced In This Issue Earning The Loyalty Of Banking Customers (34613)    EIPP: Don't Be Left Behind; Reap The Benefits (35457) Finally, A Single EBPP Network For Canada (35150) How Financial Services Leaders Manage Information Security (35432) Online Bankers: Canadian Banks' Best Customers (35537) PayPal Dominates The UK's New Payments Market (35077) The Future Of Online Trading (35722) Trends 2005: Enterprise Architecture In European Financial Services (35575) What Influences Consumers' Choice Of Banks? (35665)

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