If you regularly purchase items online, then you are most likely familiar with PayPal. The alternative payments service provider has moved forward leaps and bounds from its humble beginnings in 1998. Patrick Brusnahan, with the help of Timetric’s research, takes a closer look at this financial behemoth
PayPal is the one of the largest alternative payments service providers globally, second only to Alipay, in terms of transaction value. It enables digital payments and offers acceptance solutions for consumers and merchants.
The firm specialises in online payments, mobile and e-commerce, fund transfers, payment processing, payment security and monetisation services for developers. It has expanded its capability in the payments and money transfer businesses with the acquisitions of Zong, Paydiant, CyActive, Modest, Braintree and Xoom. The platform supports access to money on multiple devices. This includes smartphones, tablets, personal computers and wearables.
While it is a global company, PayPal is particularly active in the US, the UK, Germany, Australia and New Zealand. Following its spinoff from eBay in 2015, PayPal now operates as an independent publicly traded company.
In 2014, it held host to four billion transactions with a total value of $235bn. In September 2015, it had 173 million active users. In between the first and third quarters of 2015, net revenue was recorded as $6.7bn with a net income of $861m.
Headquartered in the US, PayPal is near synonymous with online transactions. Available in 203 markets, it entered ten new markets in 2014, making the service available to a potential new 80 million internet users. Users can accept payments in more than 100 currencies. 74% of the largest online retailers in the US accept PayPal.
According to a survey conducted by Nielsen, PayPal is also popular with cross-border purchases in all surveyed markets. 79% of respondents had used PayPal for a cross-border transaction in the past twelve months.
Products and services PayPal provides a variety of services for consumers and merchants. Users can make online or mobile payments for online shopping using a PayPal account. In addition, they can bypass guest checkout pages to avoid entering billing and shipping information.
In 2012, PayPal entered into in-store payments through partnerships with 15 large retailers, and POS manufacturers VeriFone and Equinox in the US. The company uses QR codes and facial recognition to enhance its in-store payment initiative.
One element utilises geolocational solutions. PayPal users can find merchant locations in their app and check in there. After checking in, the user’s PayPal information is held by the store’s POS system. When checking out, the POS attendant clicks on the photo matching the person and the transaction is completed without sharing sensitive information with the retailer.
Money can be transferred with just the recipient’s e-mail address or mobile number, as long as the user has a PayPal account. Moreover, PayPal Here, PayPal’s mPOS terminal, is compatible with Android iOS and Windows and allows merchants to accept debit and credit card payments through all major cards.
|November 2015||Xoom||PayPal acquired online money transfer and remittance provider Xoom Corporation (Xoom), which provides P2P money transfer services. It offers its services through xoom.com and walmart.com online in 37 countries. The acquisition is likely to strengthen PayPal’s P2P business in key international markets including Mexico, India, the Philippines, China and Brazil.|
|August 2015||Modest||In a move to expand its presence in mobile commerce, PayPal acquired Modest, a developer of a mobile shopping platform for retailers, which became a part of PayPal’s Braintree business. The acquisition enables PayPal to focus on Modest’s ‘buy’ buttons, which allow users to purchase items directly from mobile apps without having to load another web page. It allows retailers to embed ‘buy’ buttons in their own apps and emails.|
|April 2015||Paydiant||The acquisition of Paydiant is expected to help PayPal expand its mobile technology capability to QR codes and NFC. The acquisition also helps PayPal expand its client base, as Paydiant provides the mobile wallet platform for MCX – a network of US merchants. It also offers services to brands such as Subway, Harris Teeter and Capital One for mobile payments.|
|December 2013||Braintree||eBay acquired Braintree for a cash consideration of $800m, with Braintree operating as a separate service within PayPal. Braintree is a payment platform provider which allows merchants to accept online and mobile payment methods such as PayPal, Venmo, and credit and debit cards. Braintree works with most leading e-commerce and billing platforms, including Bigcommerce, Shopify, Magento and Wufoo. The acquisition enabled PayPal to bolster its global online and mobile payment operations.|