Chapter 1150 – Mobile Payments and Paypal
The four banks’ representatives were shocked. Paypal is also Feng’s company?!
Paypal is not developed by eBay. It is developed by another company, but their first big client is eBay. eBay had thought of acquiring Paypal but was stopped by Kirilenko.
This is because Paypal was acquired by Feng Yu.
eBay had planned to spend 300 million USD to acquire Paypal. Still, the shareholders of Paypal felt Paypal is worth at least 600 million. Although Paypal is not listed, the estimated value of the company is about 100 million USD.
eBay’s acquisition bid failed because of the price differences. Feng Yu immediately ask Ralph to negotiate with Paypal and to acquire it at all cost.
In the end, Feng Yu bought out Paypal with 600 million USD. He gave the two founders of Paypal 4% shares and let them continue to manage Paypal. Feng Yu also gave the development team 2% shares of the company and got them to continue to support Paypal.
With Paypal, why does Feng Yu still want to develop a mobile payment platform?
There are two reasons for this. First, the mobile payment platform is different from Paypal. The second reason is to avoid being targeted by the whole industry. When a company grew into a monopoly, it will be targeted. For example, Microsoft was almost forced to be split, and Yahoo had to be split into Yahoo US, Yahoo Asia, etc.
Rather than being forced to split, Feng Yu might as well create a competitor for himself. This way, his company will not be charged for monopolizing the market. Both companies can better take over the whole third-party payment platform market.
In Feng Yu’s previous life, Paypal and eBay’s direction is different from the mobile payment platform. Paypal is equivalent to an internet credit card, while a mobile payment platform is like an internet ATM card.
Paypal had started as an internet bank and slowly developed into a virtue credit card. Mobile payment platform is designed to act as guarantor initially and slowly developed into a virtue ATM.
Paypal charges high transaction fees, and it is their main source of profits. The mobile payment platform focused on transaction history and big data. This is more important than charging transaction fees, but it will encroach these banks’ profits.
That’s why in Feng Yu’s previous life, Paypal had developed faster than the mobile Payment platform overseas because of the suppression from the banks. The banks knew the importance of transaction data and will not let any other companies get it easily.
Paypay is more inclined to the buyers and allows buyers to stop transactions during disputes. Mobile payment platform sides with the seller. Amazon is using the B2C model, and it is Feng Yu’s company. He needs to protect the seller’s interest and prevent instances where the buyer refuses to pay after purchase.
Paypal is more suitable for the Westerns who like to spend their future money. Simultaneously, a mobile payment platform is more suitable for Asians who prefer not to spend on credit. Even before Feng Yu’s rebirth, many Chinese do not own any credit cards in their lifetimes. Many people in Europe and the US will apply for credit cards once they reach the legal age to apply for one.
Credit cards can stimulate consumer spending, but it can also easily form a debt crisis. One person doesn’t need to have an income to get a credit from Bank A, get Bank B’s credit card to repay his credit card debts in Bank A, and then get Bank C’s credit card to repay Bank B’s debts.
Borrow and repayment on time can increase an individual’s credit rating, and the person’s credit limit can be increased. Thus, this person can don’t need to work and have money to spend.
But if any problems occur in any part of this cycle, this person will be bankrupt. Once this person becomes bankrupt, his debt will become a bad debt, and if one or two people do this, it’s fine. But once more than one or two million people do this, it will form a financial crisis.
That’s why Paypal and mobile payment platforms are very different, and both companies can enter into cooperation in the future but will never merge.
Of course, in Feng Yu’s previous life, mobile payment platforms are limited to China. The transacted currency is RMB, and Paypal is primarily using USD. That’s why Paypal is more successful than mobile payment platforms.
But after mobile payment platforms entered the US, it becomes successful. The biggest advantage of mobile payment platforms is its low transaction fees. The mobile payment platforms bear part of the charges, and the banks waived a portion.
With the transaction data in hand, the mobile payment platforms are not worried they have no chance to make money. Moreover, the mobile payment platform has a seven-day clearance, which allows the platform to have enough cash flow. This is like using their customers’ money to invest and make money.
With Feng Yu around, and the mobile payment platform cannot get investment returns of more than the transaction fees, they should just close down!
Another big difference between a mobile payment platform and Paypal is Paypal sellers can withdraw cash immediately. In contrast, a mobile payment platform requires the buyer’s confirmation. If not, the seller has to wait for seven days, and buyers can also delay their payments.
These two types of third party payment platform still have some other differences. Of course, both have similarities, like they are both online payment services and are targeting similar customer groups.
Feng Yu will not explain the details to these banks’ representatives. These banks are willing to accept Paypal as they will get high returns, but mobile payment platform will be taking away a huge chunk of their profits.
“Mr. Feng, we can help Paypal to develop faster, but we feel the mobile payment platform is not suitable.” The representative from American Express said.
“Not suitable? Why is it not suitable? I will still pay you all the transaction fees. We will have lots of users, and it’s beneficial to your banks’ developments too. That’s why you all should give us a discount on the transaction fees.”
“Mr. Feng, this mobile payment platform will infringe the users’ privacy. We think this is not right.”
Infringe the users’ privacy?! Bullshit! You all are talking as if your banks did not make use of your customers’ data.
These banks just want to keep all the transactions to themselves and not let others know about it.
“What if I allow you all to invest in this mobile payment platform in the future?” Feng Yu will allow them to own a minor stake in this platform in the future for their support.
“It’s too early to talk about that. If we can invest in it now, we might consider.” Citibank’s representative replied.
The Citibank’s representative wants the company’s shares and become one of the bosses of this platform.
“Who do you all think you are?! All of you can leave now! There are other banks in the US!”
