Paypal expects to process US$3.5 billion of mobile payments this year, up from US$750 million in 2010 and an increase on the US$3 billion it previously predicted for 2011. The online payments firm led growth in its parent’s Q3 results in a sign of how mobile payments have become increasingly central to both companies' future. The parent also said that mobile commerce via the auction site is expected to generate almost US$5 billion in revenue this year. eBay reported Q3 revenue of US$2.97 billion, an increase of 32 percent over the same period last year with a contribution of US$1.1 billion from Paypal. eBay’s net income was US$490.5 million in Q3 2011 compared to US$432 million last year.

eBay president and CEO John Donahoe (pictured) said mobile, online and offline shopping are blending into a single commercial environment. The company is adjusting to this new reality through strategies such as the launch of its X.commerce platform last week. One consequence of the growth in popularity of mobile transactions is that Paypal’s loss rate (a measurement of losses attributable to payment fraud) grew to 0.31 percent in Q3 against 0.25 percent in the previous quarter. The company said the climb in the loss rate was partly due to the rise in payments via mobile devices and that its fraud-checking systems need time to adjust. Although eBay’s results matched analyst estimates in the third quarter, its tentative prediction for the rest of the year (mobile aside) led to a fall in its share price. The auction site said it was not immune to wider economic conditions.