Bill Me Later Succeeds in Turkey ?

Last week, ebay announced that it acquired BillMeLater for $945 million (820 cash, 125 in options). You can find the detailed info about the acquisition here, here, here, here or here in Paypal Media. Many people discussed if it is a good move or not during the global crisis environment. Probably, the management of ebay will explain the latest situation and their detailed investment plans in ebay’s Q3 2008 Earnings Call on 15th of October. In this post, I will be writing neither about the accuracy of the decision nor how BillMeLater works. You can find a short video about BillMeLater process here or a detailed explanation in their website.

You remember, on May 2007, ebay announced that it acquired 10% stake in gittigidiyor.com, Turkey’s leading e-commerce company based on online trading. And now, it’s discussed that ebay will acquire all stakes and/or Paypal will be an alternative payment system in Turkey at the end of first quarter of 2009. So it means that Turkish consumers will be meeting a new deferred payment method with BillMeLater.

At this point, the consuming behaviour of Turkish people has to be analysed. BillMeLater positioned itself as an alternative for Visa/Mastercard credit cards. So people who don’t want to provide a credit card number and who need a credit purchase will be using this system. If we look at the statistics of credit card usage in Turkey, we can see the increasing percentage of credit card numbers and revenue. By the end of 2007, number of credit cards reached a number of 38 million, number of domestic transactions reached 1,5 billion and the domestic revenue reached 145 billion Turkish Liras. (Ref : Interbank Card Center Datas)

On the other hand, according to Sina Afra’s (new General Manager of ebay Turkey) presentation on May 2008, there will be a $10 billion e-commerce market next year in Turkey. You can view the presentation here : turkey-internet-sector2008-1210938033630990-9

So despite the indefinite results of the global crisis, both the usage of credit cards and e-commerce market is rapidly increasing. Since Paypal+BillMeLater is adventageous against credit cards with lower commission rates, secure and simple usage and different payment alternatives, it seems logic to enter the Turkish e-commerce market. But I have some concerns about the entrance to the market.

First of all they have the leading player, gittigidiyor, with them so it will be quite easy to enclose the e-commerce market also with the help of some personal relationships. Probably, afterwards, they will have more agreements with companies of Telco, Clothing, FMCG sectors.

I am wondering how they will check the credit score, credit outstanding and status with credit agencies in Turkey. Because that s how they work in the USA. With the help of social security number, they are capable to check all these criterias. But in Turkey, there isn’t any integrated common database where you can check one’s credit score. Credit insurance companies, all the banks, even the different departments are using dissimilar criterias to evaluate their customers and consumers. Moreoever, the companies also use different methods to measure the credit worthiness of their retailers, distributors and suppliers. Summing all these, “loose credit topic” is very important. Their strong algorithm pulled in via Web APIs from credit agencies and other data providers doesn’t seem feasible in Turkey, right now. Also their “social security checking system” can not work here.

I guess, after a period, ebay will be in contact with the banks and credit insurance companies about this topic and probably they will be working with a main bank in Turkey. They can use the id card interrogation database of the biggest banks who cover the big part of the customer pie. Another question is how they will fund the deferred payments in C2C business, not similar with B2C business. Because the individual seller will not be waiting for his/her money so long. That is to say, how will they adapt CIT Bank application to Turkey?

There s one more question, that, what if some banks are also working on this “billing later” model ? Then, there can be some deals or a competition between ebay and the banks.

Actually, I am so excited about the entrance of ebay, because there will be some huge changes also in payment behaviours of consumers. At the same time, it’s exciting how ebay will implement BillMeLater operations into Turkey e-commerce market. Because it’s so sure that Turkish consumers really love deferred payments. A suitable solution with BillMeLater can make them so shopaholic. Let’s see how it will work…