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PayPal Merchant Services Case Solution

Case ID: 806188
Solution ID: 1308

Words: 1282

Price: $45

Case Solution

In the beginning of 2006, the managerial team for PayPal was determining how to react to Google’s set-in into the online payment market. PayPal, which is owned by eBay, had its potential target customers defined as the online traders who were external to eBay’s auction group, in aims of growth over the next two years. Google is a pertinent challenge for PayPal’s ‘off e-Bay’ plan and tactic, just like the rising credit card companies. PayPal’s managerial team must decide if it will have to increase its funding in the ‘off eBay’ plan, and if so, how to distribute resources between the two sides of the business generation (i.e. consumers and traders), which consumer segments to target (the existing target audience vs. the new one); which types of online traders to hire (bigger ones compared to smaller ones); and what alterations to introduce to the pricing policy and nature of the products.

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Questions Covered

What explains PayPal’s early success? Discuss the role of PayPal’s strategy in its success, as well as the role of decisions by actual and potential competitors.

How vulnerable are Visa and MasterCard to share erosion in e-commerce payments due to PayPal’s off-eBay expansion? What, if anything, should the card associations and their members do about PayPal’s off-eBay initiative?

What strategy should PayPal pursue for Merchant Services? How should PayPal allocate investments between efforts to grow the merchant side and the consumer side of its platform?

Does Google Checkout represent a serious threat to PayPal? What, if anything, should eBay/PayPal do to defend themselves against Google?