Holger Spielberg, Head of Mobile Payments and Innovation at PayPal Germany
We talked to Holger Spielberg, Head of Mobile Payments and Innovation at PayPal Germany, about the latest developments in mobile payment and PayPal’s vision of future shopping. Holger has been with PayPal since January 2011. He has more than fifteen years of experience in leading positions across a number of industries, from telematics and telecommunications to mobile services. He is also involved in startups, as founder, executive, angel and advisor.
Payment Observer: Can you give us some details on the mobile payment background of PayPal?
Holger Spielberg: PayPal is the leading electronic payment method and is mostly known for its activities in the e-commerce world. But PayPal was actually founded to transfer money between Palm Pilot PDAs back in 1998. When the founders recognized that they were really visionary with their idea they started to focus on the emerging market of electronic commerce on the internet. As you know, PayPal was acquired by eBay, and that helped to further the growth and to gain knowledge in how to operate a global payment system. PayPal’s DNA is mobile. Over the last 10 years the company learned how to process mobile payments, how do deal with customers. Now we are coming back to our own DNA, and have the possibility to offer mobile payments based on the operational excellence from online payments. As I always say: If you want to offer mobile payments you have to know payments first.
Payment Observer: Mobile payment is one of the hot topics these days. A lot of companies such as Visa, Google or ISIS are starting mobile payment and digital wallet services. How do you see the market?
Holger Spielberg: We see that the lines between e-commerce and commerce are blurring, at the end of the day it all becomes commerce. The channel through which the purchase is made becomes less and less a distinguishing factor.
With regard to mobile payments, we have to differ mainly two areas: one is payments through mobile web or mobile apps – in that area PayPal is definitely a leading player when it comes to number of transactions and transaction volume. The other area is payment at the point of sale featuring proximity technology (such as NFC, QR-Codes or Audio). This area is not fully evolved yet, there is no clear leader at this point. There are a number of big players trying to enter that market because it holds enormous potential and is ripe for innovation. Banks are playing a role, carriers are playing a role and obviously credit card companies have been a player in that space for a number of years. And, PayPal is clearly on a path also to be integrated at the point of sale.
Payment Observer: Is mobile payment a “must have” feature or just “nice to have”?
Holger Spielberg: I am convinced that for merchants it’s a must have to start dealing with mobile payments today. In the near future, the number of mobile devices will outstrip the number of PCs. We believe that half of the transactions in electronic commerce will be happening trough a mobile device in about 5 years. Merchants will have to deal with mobile payments because the number of mobile devices will be so significant they can’t deny it.
On the consumer side, I believe mobile payments are currently more a nice to have feature. But as more and more merchants are providing mobile payment options the ubiquity and availability will be much bigger. In a few years mobile payments will be a must have for consumers if they want to be able to make use of offers and deals only possible at specific times or locations.
Payment Observer: Can you give us some details on the role of mobile in PayPal’s vision of future shopping?
Holger Spielberg: Our vision is to enable payments anytime anyplace by any means. We see mobile payments as a catalyst for innovation. The broad features of mobile devices allow us to change the way people are shopping and how merchants interact with consumers. Our vision includes picking up the customers really early in the shopping experience by empowering them to find product information or deals, and providing them the flexibility to choose different payment methods.
Mobile payments is not only an additional payment channel but rather connecting different worlds. We see mobile payments as a combining catalyst of storefront, online, mobile and even purchasing on the go. We provide payment options and flexibility for merchants and consumers through all channels. We believe the combination of being a bank and an internet player provides us the flexibility to think innovative along the entire shopping process. Our aim is not just to exchange the POS terminal, but to change the whole end-to-end shopping experience.
Payment Observer: Can you give a real-world example of how mobile devices can be integrated into the shopping experience?
Holger Spielberg: Just recently, PayPal Germany announced the availability of the PayPal QR shopping solution. As a consumer, if you are interested in an item you scan the QR code and add it to a virtual shopping basket and in the end pay directly with PayPal. Merchants are starting to include QR codes on advertising and in stores. Some retailers also want to enable the purchase of items trough the shopping window. Basically they can enlarge their store virtually to create more revenues per floor space. PayPal is the enabler of such multi-channel solutions by providing a secure end-to-end platform.
Payment Observer: Is PayPal relying on QR solutions only or are you also looking at other technologies such as NFC?
Holger Spielberg: PayPal is agnostic towards technology, we include everything which makes sense to us to provide a secure and stable transaction service today. We are looking at any technology including NFC, we just believe it will take a while before market readiness. We bring out our solutions based on existing technologies, whenever it makes sense to us to add another technology we will certainly do that. I would predict that NFC is moving closer into focus in the year to come.
Payment Observer: Will PayPal continue to focus on processing transactions or will it venture into other services?
Holger Spielberg: We really believe in extending the value chain and also includes special offerings, deals and coupons. The pressure on the transaction price in retail is significant, and will even grow. PayPal clearly sees additional revenue potential beyond transactions in value added services such as couponing, deals, inventory availability and product information.
Payment Observer: Can you give us some numbers on how many mobile transactions have been processed by PayPal so far?
Holger Spielberg: Aggregated over the time period between March and November 2011 we processed $165 Million in Germany. In markets with higher penetration of smartphones the percentage is even higher, about 6-9% in the UK and above 10% in Australia. A significant part of our transaction volume already comes through mobile means and mobile payments. We expect these numbers to increase significantly over the next two to three years.