|PayPal is the big winner of mobile commerce|
Mobile commerce, also known as m-commerce, is the act of purchasing goods and services via mobile devices, such as smartphones or tablets. Earlier this year, the consulting group comScore found that people spend more time shopping on mobile devices over PCs by a 2-to-1 margin. Business Insider predicts m-commerce to reach $284 billion by 2020, good for a projected 45% of e-commerce.
There may be no company better positioned to capitalize on this growing trend than PayPal Holdings. In the company's third quarter, its mobile payment volume rose to about $40 billion, a 54% increase year over year. CEO Dan Schulman certainly understands the importance of the trend. In the conference call following PayPal's most recently reported quarter he said, "Mobile is becoming the defining force in digital payments. It is rapidly blurring the distinction between online and offline and accelerating the adoption of digital payments."
PayPal's One Touch platform certainly deserves the lion's share of the credit for PayPal's growth in this area. One Touch allows users to essentially register a device and then complete purchases on that device -- through websites and apps that accept PayPal as a method of payment -- with one click. The platform has seen explosive growth and more than 70 million consumers and six million merchants now participate in One Touch. The feature works so well that it sports a sales conversion rate twice as high as the industry average. This means that once a consumer starts a shopping experience they are twice as likely to complete the transaction using One Touch than another payment method.
PayPal's growth in mobile commerce is unlikely to slow down anytime soon. This quarter Venmo users will be able to use PayPal's popular P2P app to make purchases at vendors wherever PayPal is accepted. PayPal investors should be able to enjoy the ride as the company rides the m-commerce wave to more market-beating returns.