What are the factors that have contributed to the growth of e-commerce?  I think basic trust is an important one, followed closely with information security improvements (e.g. SSL).  However, one factor has long been in place before the internet: Payments and remittance infrastructure, beginning with the post office, banks and their money transfer mechanisms, credit cards and ending with PayPal.

eBay bought PayPal in 2002, for $1.5B.  At the time, they had already acquired Billpoint, but had failed to gain marketshare against PayPal.  in 2002, 25% of eBay transactions were settled using PayPal.  In 2000, the rate was almost zero.  Meg Whitman had commented back then that the target rate was over 60%.

I have not been able to find out what that rate currently is, but browsing eBay, it’s easy to see that it must be very high.

I wonder if the infrastructure for peer-to-peer payment systems would disappear overnight, what would happen.  Would volume on eBay decrease permanently?  Would nervous shoppers move to stronger-brand merchants like Amazon, from the unknown counterparts on eBay?

I suspect so…  So for the markets where the auction market is still immature, is the infrastructure still too undeveloped?  I think an opportunity is hidden in the infrastructure side.