Where Does PayPal Go From Here?

Soon, PayPal will be completely disassociated from eBay. With so many possible directions, which way will it go?

Bloomberg Businessweek is reporting that there are a couple of possible roads for PayPal to travel since soon the company will not be doing business with eBay.

“They are in a little bit of a strategic void, and the new leadership will have to decide which strategy to pursue,” says Daniela Mielke, former PayPal vice president for global strategy who now works for payment-processing company Vantiv (VNTV).

Mielke said one possibility was to create new contracts with other retailers. It would want to try to create relationships with Amazon and Wal-Mart, two of the largest retailers worldwide. This would require bursting into a market where payment services are already covered, but PayPal could convince a retailer that PayPal has a large enough clientele to make it attractive.

Another possibility is for PayPal to become an Apple alternative for payments. Right now, PayPal does not do in-person or in-application purchase like you can with Apple’s mobile wallet. PayPal could align itself with Samsung, or Samsung could buy PayPal directly, and PayPal would be Samsung’s mobile wallet.

A third and potentially intriguing idea is for PayPal to get a charter and become a bank. This way, PayPal can underwrite its own credit products, hold its own accounts, and do other bank-like activities. It isn’t easy getting a bank charter, but this would make the company something much different than it is now, but that’s the point of setting out on a bold new path. PayPal has a strong reputation with younger people, who make up an attractive market to tech companies looking to edge in on financial services.

The New York Times is reporting that PayPal has brought in Dan Schulman to oversee the new direction, A former executive at American Express, Mr. Schulman helped introduce a prepaid card called Serve, expanding a brand historically synonymous with an affluent customer base to new segments of the market. He also led a similar push at Virgin Mobile, where he was chief executive at the behest of its founder, Richard Branson, introducing a wave of prepaid smartphones to young customers.

Analysts say Mr. Schulman must push PayPal to make significant advances in mobile and in-store-purchasing products, areas that PayPal has historically had to buy its way into. Partnerships with other companies — like Google and Amazon — may prove to be fertile ground for future growth after PayPal unties itself from eBay. PayPal must also relieve itself from its antiquated code to actually begin moving forward.

[Image courtesy of Logo Curio]