ePayments Week: eBay's ecommerce platform

Magento fills out eBay's platform ambitions and a report predicts $50 billion via NFC by 2014.

Here’s what caught my attention in the payment space this week.

EBay buys rest of open source ecommerce platform Magento

MagnetoEBay’s announcement this week that it would buy the 51% of open source ecommerce platform provider Magento that it doesn’t already own moves eBay closer to its goal of having an end-to-end commerce platform that integrates online, mobile, and physical retail spaces. Earlier this year, eBay put up $2.4 billion to buy GSI Commerce, which provides eCommerce services for retailers whose primary sales channels are physical retail stores. By integrating Magento’s platform, which already serves tens of thousands of merchants online, eBay widens the scope of its merchant partners and the services it provides to them.

A video message from eBay CEO John Donahoe (below) lays out the ambition for the company’s newly formed Open Commerce Platform group. In the presentation, Donahoe says Magento’s capabilities complement those of GSI to make eBay “the strategic commerce partner of choice for retailers of all sizes.” As part of this effort, eBay is adopting and expanding on its subsidiary PayPal’s developer program, changing its name from X to X.Commerce ahead of this year’s developer event, which is scheduled for October.

EBay and PayPal have supplemented these major purchases with several smaller scale acquisitions this year, detailed nicely by Ryan Kim on GigaOm. These purchases include: Milo, for helping people find products locally; Where, with its location-based ad services; and Fig Card, which helps merchants accept payments (including as SMS texts).

Magento’s senior executives are clearly pleased in their video announcing the deal, which shows them in front of palm trees with downtown L.A. in the background — perhaps to emphasize their independence from Silicon Valley? It will be interesting to see how eBay and PayPal treat the open source version of Magento, as eBay is eager to expand developer interest in its entire platform and the open source version represents a broader playing field that expands their developer audience. While there are many ways to measure the success of an open source development project, one of those is a successful commercial exit strategy. And as Alan Shimel noted on NetworkWorld, Magento’s sale represents “another commercially successful open source project that returned money to its investors,” which, he adds, is further proof of a healthy open source ecosystem.

Report: $50 billion in NFC payments by 2014

A bullish report from Juniper Research released this week proposes that NFC payments — that is, mobile transactions that rely on near-field communications wireless technology — could rocket from about zero today to $50 billion in only three years. That’s a steep climb, and it will only be possible with the support of a lot of other growth curves working together. That includes wider NFC adoption by handset makers, broader uptake of NFC-capable smartphones, agreed-upon ecommerce standards for NFC payments, and greater consumer acceptance.

On that last point, CNET’s report on the Juniper study pointed to a recent survey by Mastercard that displayed a striking generational gap on the issue of comfort with payments. Mastercard’s survey found that 63% of those between 18 and 34 said they would be comfortable using their phone to make a purchase, while only 37% of their older cohorts said they were comfortable using their newfangled contraptions in this way. It will be interesting to see how the carriers and merchants promote the security and convenience (or appearance thereof) of mobile payments to this older demographic. And, of course, they may not need to: if mobile payments follow the path of other tech innovations like the web, texting, and Facebook, it’s likely that where the young’uns lead, their elders will follow.

Got news?

News tips and suggestions are always welcome, so please send them along.


If you’re interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O’Reilly and PayPal.

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  • Philip Cohen

    eBay, Magento, AliExpress, Skype, PayPal, Google, Schmoogle, whatever

    The rusting old hulk eBay is presently being kept afloat by the clunky PreyPal so it’s good to see these boys recently squabbling and threats to PreyPal now coming thick and fast. It’s interesting times for all we eBay “haters” (oops, I mean “watchers”). I just hope that someone has remembered to bring the popcorn.

    PayPal is mostly registered in various places not as a “bank” but only as a “money transmitter” (like Western Union), and PayPal actually claims that they are not a “payment processor”, and there is a minute degree of truth in that claim because it could, nonsensically, be claimed that they do no more than facilitate the transmission of money by riding on the back of the banks’ existing payments processing systems.

    In fact, the only thing creative about PayPal has been their use of users’ email addresses as an identifier for online transactions. PayPal is otherwise no more than a blood-sucking parasite on, and in the main cannot function except via, the banks’ existing payments systems (via their banker, GE Money Bank—Ugh!).

    PayPal, outside of whatever will ultimately be left of the Donahoe-devastated eBay Marketplace, will undoubtedly eventually be consigned to the history books by all the retail banks/Visa/Mastercard once those players get their “online” act together.

    Some people may not like “the banks” but all those participating retail banks at least supply a professionally run payments processing system—unlike PayPal’s—and even PayPal concurs with that assessment: except for intra PayPal “account” transactions, they use the banks’ payments processing systems all the time and simply could not exist without it.

    Regardless, all the above comments apply equally to all of the other third-party “payments processors” that are emerging out of the woodwork and wanting to have access to your banking account. Unless they a formal arrangement with all the participating retail banks, as do the likes of Visa/MasterCard, then the result is invariably going to be as potentially problematic as presently is PayPal’s clunky operation for its merchants, and many of them can tell you a sorry tale or two.

    All anyone needs to know about the clunky PayPal can be found at:
    http://forums.auctionbytes.com/vbulletin/showthread.php?p=165263

    Is that PayPal’s blood in the water, and are those “sharks”—oops, “banks”—I can see circling?

    Enron / eBay / PayPal / Donahoe: Dead Men Walking.