PayPal, No Longer eBay's Little Cousin, May Seek Acquisitions for Growth (Video)

PayPal was the little payments company that eBay purchased eight years ago, but now it has the potential to grow faster than its parent company.

Look at some of the evidence: PayPal’s revenues now represent more than 37 percent of eBay’s total, up from 23 percent five years ago. In the past year, the company’s revenues grew 16 percent, whereas eBay’s revenues have remained nearly flat at 3 percent.

This week in San Jose, I had the chance to sit down with Sam Shrauger, PayPal’s VP of Global Product Strategy, to get the scoop on some of his pet projects, which are generating a lot of the new opportunities.

Shrauger is just the right man for the job. He joined PayPal in 2004 with the mandate to create the company’s Merchant Services business unit, which was PayPal’s first real push to operate more broadly on the Internet–outside of eBay’s walls. In 2009, that unit processed $39.5 billion in total payment volume, up 33 percent year-over-year.

Now, Shrauger is spending his days looking for PayPal’s next rising star. The contenders are products in mobile payments, virtual and digital goods and instantaneous credit to online shoppers via its Bill Me Later option.

Some of them are already generating big numbers, but still have a long way to go. For instance, last year, PayPal assisted the sale of $2 billion in digital goods, including music, videos, virtual goods, etc. That number had already increased to $1.3 billion in the first six months of 2010. In addition, PayPal expects to handle more than $700 million in mobile transactions this year (but that represents less than 1 percent of all of PayPal).

In the video, Shrauger talks about some of the competitors in the space, and says that if growth opportunities exist outside of eBay’s walls, PayPal will consider making acquisitions to move the needle. “That’s the great thing about being a part of eBay Inc. EBay is a company that’s very well funded….That will continue to be part of our strategy, where we think it makes sense to acquire a capability or users of some kind. We will always consider it.”

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