Essentially, because Paypal has the best anti-fraud measures in the world, by a factor of lots. Every payment processor in the world is in a four way footrace: their opponents are organized crime, individual scammers, and their local government (who will want to shut them down to prevent scams and moneylaundering). The prize for second place is your business imploding.
Because PayPal is the only one that actually works in 150+ countries worldwide. No service offering US or US+CA+UK only service could compete with PayPal effectively, even if it were 1000 times better in technical, UX or business terms, because something that works with a lot of pain is still infinitely better than someone that doesn't support your country.
Sounds like a trust-issue. Perhaps that's it? Startups often fee they don't have do spend money on marketing. But a trust-issue is a good problem to have, branding can take care of that. First thing to do is convert 'trust -> faith & confidence'.
"...there is also growing evidence that increasing numbers of people today are unwilling to engage in social or economic contracts based on trust. Globalization has arguably contributed to a loss of social connectedness in many developed and undeveloped nations by disrupting traditional employment patterns, and people who have seen their social networks disrupted may be reluctant to trust others.
Meanwhile the traditional family has been under assault by other social changes, and young people may find it difficult to even learn to trust. For many people, relationships based on faith or confidence may feel more comfortable than those based on trust. Source (2005): http://www.brandchannel.com/features_effect.asp?pf_id=263
Google blew it with Checkout a long time ago, and they mostly gave up on it until a year or so ago when they launched Wallet. But they wasted 5 years on by not even moving the needle in the payment processing market.
Not having Checkout/Wallet as a popular payment system has also been (and still is) a major obstacle in getting people to buy apps and content from the Play Store. If Checkout accounts were as popular as iTunes or Amazon accounts at least, things would've gone a lot more smoothly, and I'm sure more merchants would've preferred it over Paypal, too.
Agreed. I'm sure people would trust/have faith in Google to do 'purchase and checkout' right. No idea why they can't seem to get it right. Even if it was just for their Play Store...
Someone needs to ask this question to the likes of Stripe. Why is their fabulous service limited only to US/UK? Is it laws? Is it fraud? What prevents them from extending their service to other countries?
Mainly because the "simple" act of a user in one country transferring money to a user in another country, where both users deal in their native currency, is incredibly complicated. Currency conversions, banking laws, high fraud risk, etc.
