Case | HBS Case Collection | April 2006 (Revised March 2007)

PayPal Merchant Services

by Thomas R. Eisenmann and Lauren Barley


In early 2006, PayPal management is deciding how to respond to Google's entry into online payments. PayPal, owned by eBay, has targeted online merchants outside eBay's auction community for its next wave of expansion. Google represents a potential threat to PayPal's "off eBay" strategy, as do incumbent credit card companies. PayPal management must determine whether to increase investment in its "off eBay" strategy; how to allocate investments between the two sides of its payment network (i.e., consumers and merchants) which consumer segments to target (e.g., existing PayPal account holders vs. new users); which types of merchants to recruit (e.g., large vs. small); and what changes to make to pricing terms and product features.

Keywords: Online Technology; Competition; Expansion; Service Operations; Auctions; Web Services Industry; Service Industry;


Eisenmann, Thomas R., and Lauren Barley. "PayPal Merchant Services." Harvard Business School Case 806-188, April 2006. (Revised March 2007.)