PayPal and Verisign

You probably heard about PayPal’s move to purchase Verisign for $370 million a few weeks ago. Here are a few quick thoughts on this topic:

Deployment strategy is still unclear to me

It’s easy to imagine how PayPal will deploy itself to the Payflow Link crowd, but it’s harder for me to see a clear strategy for how PayPal plans to add itself as a payment option to all the Payflow Pro merchants. The Verisign merchants that are using Payflow Pro represent the higher quality segment of the Verisign customer base, but they are also going to be harder for PayPal to reach. Unless the merchant is using a hosted, 3rd party shopping cart — which would be unlikely for the larger merchants — PayPal is going to have to find a way to persuade these merchants to integrate the PayPal API’s into their existing websites and applications. The amount of time and programming to do this is not nominal. Expect to see PayPal persuade merchants to do this via some kind of pricing incentive (e.g., Payflow Pro customers who agree to integrate PayPal’s Express Checkout will get a break in price for the Payflow Pro functionality).

Good boost for the PayPal brand

This deal is great for PayPal’s brand. Over the five years I spent working at PayPal, talking to prospective merchants, it’s clear to me that one of PayPal’s biggest problems is the misconception that it’s only for small businesses. I’ve spoke to literally hundreds of merchants who perceive of PayPal in this way. Like the Dell deal, aligning the PayPal brand closely with Verisign will be a good boost for PayPal’s brand perception amongst successful online merchants.

PayPal required?

How draconian will PayPal’s deployment strategy be? If PayPal wanted to be really aggressive, it could tell Verisign merchants that if you want to process cards with Payflow Pro, you will be required to offer PayPal to your customers as well. This I think is unlikely, but not out of the question.

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