Back in early 2000, a nascent PayPal – pre-merger with Elon Musk’s X.com – led by two of its founders – Luke Nosek and David Sacks – had an epiphany when they received an email from an eBay user requesting their permission to post an HTML logo of PayPal on the user’s auction page. The PayPal logo ‘button’ linked back to PayPal’s website, where winning bidders could open a PayPal account and make payment. Nosek and Sacks realized that because eBay provided its users with the ability to customize specific sections of text on their auction pages, PayPal could leverage eBay’s platform, and its users’ desire to benefit from PayPal’s then $10 referral bonus program, to advertise its new payment’s services. This kicked off a power struggle between PayPal and eBay who both then realized the extraordinary opportunity to monetize payments over a rapidly commercializing internet. eBay, though slower than PayPal to realize the payments opportunity, went on to bring in Wells Fargo as an equity partner in a previously underutilized credit card processing acquisition called BillPoint, which stood to compete with PayPal as its own, alternative native payments flow. These seminal events ignited an epic commercial war between eBay and PayPal to capture the newfound online payment’s activity, a war which ended in 2002 when eBay acquired the upstart alternative payments provider.
Hearkening back to this chapter of the ‘PayPal Wars’ of the early aughts, replete with the echo of the commercial rivalry, is this week’s most interesting story where it was reported that e-commerce giant Shopify issued a warning to its user-base – merchants – not to install Amazon’s “Buy With Prime” button on their Shopify hosted websites. Shopify asserts that doing so is a violation of its terms of service. Though Amazon’s ‘Buy With Prime’ functionality ostensibly adds value to Shopify merchants by allowing purchasers to leverage Amazon’s logistics wherewithal, it also slides purchasers into Amazon’s payment’s flow because buyers who opt for the service have existing Prime accounts, where Amazon stores their payment credentials. In a similar vein to the PayPal / eBay kerfuffle, Shopify, like eBay, is none-to-pleased with Amazon’s use of its platform to ‘back-door’ its own payments processing services into Shopify’s hosted e-commerce sites. Though it’s highly doubtful that a merger between these two titans of e-commerce is forthcoming, the conflict surely stands to stoke the fire of a continuing commercial rivalry, not seen in quite some time. One that highlights the tremendous ancillary value that capturing consumer payment’s activity brings to any large-scale, commercial tech platform.
