Paypal Gets Major Bump from iPhone App

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Launched just three weeks back, version 2.0 of Paypal’s iPhone app has already been downloaded more than a million times, cementing the massive micropayment platform as the leading player in the mobile payment space.

The press around the app didn’t hurt one bit. The latest version of Paypal’s app made deeper use of the iPhone’s functionality, letting you “bump” iPhones to settle a debt. Out at dinner and want to split the tab? Just click iPhones together and the app automatically exchanges payment information. If that’s not dead simple enough to understand, Paypal produced a cheeky video to explain the concept:

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Mobile payments is a burgeoning industry, with estimates placing the number of mobile payment users at some 75 million by the end of 2009. But there’s a big focus this year on making the process as frictionless as possible. A company dubbed Vendmo goes a step beyond Paypal in that it doesn’t even require you to get permission to debit your friend’s account, so long as he indicates he trusts you in advance. Zong lets you make payments using your mobile phone number (albeit taking a hefty cut in fees).

But as flashy (and odd) as some of the slate of new micropayment providers are, Paypal comes into the game with a huge advantage. The service already has more than 150 million users, transferring $2 million around every hour. There’s also no fees for person-to-person transactions beneath a certain level, a huge advantage for the casual user. If the company can keep on the forefront with innovations like their new app, there’s little indication any of the newbies can threaten their position.