May 20, 2011, 5:25 PM

Mobile takes sales from stores, not the web, PayPal says

M-commerce actually is adding to the e-commerce slice of the pie, a PayPal executive says.

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M-commerce is set to grow, says one payments executive.

Those who argue that mobile commerce transactions take a bite out of e-commerce activity may have to rethink that position if the early returns on PayPal’s m-commerce volume are any indication.

“The commerce on mobile phones isn’t just taking a share of e-commerce; it’s actually growing the overall pie of e-commerce,” Laura Chambers, PayPal senior director of mobile, told Internet Retailer today at the Chicago Federal Reserve Bank’s 2011 Payments Conference. “The vast majority of transactions we see coming from mobile devices are not just a dollar I would have on spent my computer. It’s actually a dollar I would have spent in the offline world,” she says, referring to transactions made inside a physical store.

For example, consumers are using mobile apps and sites to “buy mobile/pickup in store.” Meaning they shop for merchandise, purchase it on their mobile phones and pick it up at a nearby retail location. This cannibalizes in-store sales and moves them online. PayPal declined to provide data on this trend.

PayPal has experienced significant growth in its mobile payment volume, going from $25 million in 2008 to $750 million in 2010. By 2013, PayPal expects its mobile payments volume to reach $7.5 billion. In March, PayPal said mobile payments averaged $6 million per day.

One driver for the ascent of mobile commerce is the growing adoption of smartphones, Chambers says. PayPal says that in the next 10 years there will be approximately 50 billion devices, from smartphones to gaming consoles, with Internet connectivity.

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