PayPal is the company most likely to establish an e-cash standard for low value Internet payments, says research firm Gartner, releasing figures which indicate that the person-to-person payments outfit is consolidating its market lead over rival operators.
Results of the Garner survey, which questioned 1000 US adult online consumers about their payment practices, show PayPal is by far the most trusted and used of all Internet P2P payment systems in the United States.
The survey finds:
* 33 per cent of online consumers consider PayPal a highly trusted provider of payment services;
* only 21 per cent of respondents consider Billpoint, which came in second, highly trusted;
* 27 per cent of respondents use PayPal — 2.5 times more than its nearest competitor, Billpoint, used by just 11 per cent. (The same percentage of respondents plan to use each service in the future: 8%.)
PayPal's other competitors trail far behind in trust and usage. Only one per cent of respondents use C2IT, owned by Citibank, (4% plan to use it in the future), and only 17 per cent consider it highly trustworthy; three per cent of respondents use Yahoo!PayDirect (with 5% planning future use), and only 12 per cent consider it highly trustworthy.
Gartner believes consumer support and demand for an alternative to credit cards may eventually drive large e-tailers to accept PayPal — even though PayPal's merchant costs are comparable to credit cards.
The survey shows nearly 80 per cent of consumers know about P2P e-payment services and their usefulness for online purchases and fund transfers. But respondents are actually more interested in using P2P services for person-to-business transactions (e.g., paying auctioneers and e-tailers) than for P2P payments (i.e., sending money to other individuals in the United States or abroad).
PayPal will likely remain the dominant service provider in the P2P market, suggests Gartner. Its user base, already growing by more than 20,000 per day, will continue to grow at eBay and across small online businesses. Gartner believes that when PayPal reaches 25 million users — up from 13 million today — its loyal and satisfied consumer base may force large e-tailers to accept PayPal as an alternative to credit card payments.
When that happens, Gartner reckons that PayPal may be forced to apply for a banking license in order to satisfy regulators and users of its integrity.