Sydney-based electronics company Paymate has been invited to offer its payment system on the US-based website eBay.com, opening the door to a $35 billion market.
Sydney-based electronics company Paymate has been invited to offer its payment system on the US-based website eBay.com, opening the door to a $35 billion market.
Paymate managing director Dilip Rao says the company has been working with the US e-commerce giant since last August. eBay, which owns payments market leader PayPal, has been forced to open itself up to other payment providers after instituting a policy that buyers and seller could only use electronic transactions.
“They saw that we did come up to the mark, and hence we were approached,” Rao says. He expects the payment system will be up and running in February, after final testing.
Paymate’s eBay invitation comes despite the company’s somewhat acrimonious relationship with eBay Australia.
Earlier this year Paymate wrote to the Australian Competition and Consumer Commission accusing eBay Australia and its subsidiary PayPal Australia of anti-competitive behaviour, and misleading and deceptive conduct over eBay Australia’s attempts to force sellers to only offer PayPal.
Rao is hopeful eBay Australia may also decide to offer Paymate to customers.
“I think that’s really their call. Every subsidiary makes its own decisions. But clearly if it’s good enough for eBay.com it should be good enough for eBay.com.au.”
Rao is quick to point out that just being on eBay is no guarantee to success, but says it will give the company the validation it needs to start building a presence in the US e-commerce market.
The company’s big challenge is to build market awareness. So far Paymate’s marketing budget has been miniscule (the company started with just $350,000 of capital, compared with PayPal’s start-up funding of $100 million) and Rao says he needs to raise $3 million to $5 million to fund a marketing campaign.
He’s knows that won’t be easy in the current climate, but is hopeful of tapping investors in Australia and in the US.
“I have a habit of doing these things,” he says ruefully. “I set up the company in 2000 just after the dot-com crash and struggled to get $350,000 together then. We’re used to running on the smell of an oily rag.”
Rather than targeting ad-hoc eBay sellers, Rao plans to aim his marketing efforts at those sellers with sales of $10,000 a month.
“They are experienced, they understand risk and they will be able to see the value we add. We are not really seeking to sign up millions of clients.”
Paymate has also recently expanded into the Chinese market, where it is working with Alipay, part of the Chinese e-commerce giant Alibaba.
The two companies recently launched Australia’s first Chinese/English online shopping mall, called Haiwaibao, to help Australian merchants sell to Chinese customers. “We’re starting to get traction on that,” Rao says.
Overall, he hopes Paymate is about to enter an exciting growth phase. “In the next six months if we can raise the money we can really make a fist of it.”
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