its service even more secure through the introduction of the PayPal Security Key in January 2007. PayPal also launched a service called PayPal Pay Later in August 2007, offering buyers the option to defer payments for purchases on participating merchant sites, with financing options such as no payments for 90 days. While similar services such as Bill Me Later exist, PayPal's enormous user gave this feature an immediate, built-in boost.
The future looks promising for PayPal, but there are significant challenges. "International is still an enormous market for PayPal that it has yet to crack," Higdon says. "Mobile, however, will be the biggest challenge, and opportunity, PayPal has faced. Everyone from VISA and MasterCard to major financial institutions to mobile carriers is working on mobile payment initiatives -- any of which has the potential to disrupt PayPal's business model."
Read the rest of the First To Market special feature:
- Yahoo Mail's road to success: Sticky content, regular upgrades, and keeping up with Gmail
- AIM's formula for success: Buddy lists, IM partnerships, and the enterprise
- eBay's formula: An easy-to-use online marketplace and a dedicated community
- VeriSign's recipe: "Magic cookies," branding, and a need for security
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