PayPal to Venture into Daily Deals

PayPal in a landmark announcement has revealed that it will enter the discount coupon market to take on the likes of Groupon. It is planning to offer a service that will personalize the process of offering coupons based on buying habits and mobile phone locations.

At this juncture, PayPal has tied-up with 200 U.S merchants for the service, says Anuj Nayar, a PayPal spokesperson. He declined to comment on the names of the merchants. The service is most likely to be rolled out to customers before April 2012; the first point of entry will be the mobile-deals segment.

Prior attempts to capture the daily deals market were not fruitful for the likes of Facebook and Yelp. Scott Thompson, president of PayPal, told Bloomberg that the company will customize its offers based on consumer’s previous purchases. The consumer base of PayPal stands at a whopping 103 Million. PayPal’s recent acquisition of Where gives them an edge with its mobile technology.

The daily deals segment is currently ruled by the likes of Groupon, LivingSocial and Amazon. PayPal is looking to go one step further and provide relevant offers. To quote an example, Nayar said “As a 40 year-old male, I don’t think I’ll ever use a coupon for 50% off bikini wax”. He also added they would take up a laser beam-like approach to make sure the offers are appropriate. It is also necessary to point out that eBay; PayPal’s parent company has been offering online deals for a number of years.

The entry of PayPal could stir up the daily deals segment, it is expected to be worth $4.2 Billion by 2015. The announcement comes as a part of a slew of projects from PayPal including a Facebook app designed to send money between friends and a mobile payment system, both unveiled in November.

PayPal’s huge consumer base and knowhow of the market clearly gives them an edge in the business, but to see the extent of the damage that they cause, we’ll have to wait and watch.

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