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Poster child showing signs of aging?
PayPal has been the poster child of fintech and digital finance for decades, and for a long while, it seemed to be on an endless upward trajectory. It was the original, and most other entrants to the market were mere copycats. However, that is no longer the case, and in some instances, the payment provider has had to play catch-up with other innovators. PayPal might have started the revolution, but it was not the first to offer staged payments or mobile digital wallets. It faces considerably more competition than ever before, and new contenders are continually encroaching on its space.
Over the past year, PayPal Holdings (PYPL) stock surged 34% but things are not looking quite so rosy at the moment. In fact, its value is down 8% year-to-date. Its performance has been somewhat under par since 2022, and some people feel that it has lost its competitive spark and become more like the institutions it was set up to challenge. However, commentators do not believe that it is in terminal decline, but rather more of a mid-life crisis. Its fundamentals are strong, and its $15 billion share buyback program was approved earlier this year.
Building the bases
The fintech sector is a crowded market, but PayPayl is one of the most prominent players. It was recently reported that it processes about $1.7 trillion in payment value with over 400 million active accounts. However, it is dwarfed by the leaders, Visa and Mastercard, having both a lower market capitalization and lower payment processing figures. One could say that PayPal was a victim of its own success. It was established because the likes of Visa and Mastercard could not securely process online payments; however, having done so much of the groundwork, they have been copied and outstripped by the legacy brands.
Although it did not make the Forbes 50 Fintech companies of the year list, it has continued to show steady growth overall. What it has is resilience and staying power in a market that is constantly changing and evolving. While it may no longer have first-mover advantage, it has a strong name and brand recognition and is a firm favourite among millions of online shoppers.
New ventures
Despite various attempts, PayPal has never really broken out from its e-commerce and peer-to-peer roots. However, it has recently launched a Venmo initiative that it hopes will increase transactions through in-person interactions. For the American market, Venmo has announced new Big 12 Conference and school-branded card designs for its Venmo Debit Mastercard. In addition to using the card for everyday purchases, Venmo Debit Card users can activate cashback offers, unlock enhanced rewards, and gain exclusive access to events, giveaways, and gameday upgrades.
"Venmo's origins are on college campuses. It's where our network took hold. Today, it still plays an integral role in the way millions of college students, athletes, alumni, and fans engage with each other and move money in their daily lives," said Geoff Seeley, Chief Marketing Officer, PayPal. "We're not just putting logos on debit cards – we're creating experiences rooted in the passion and community of college sports so people can feel closer to their schools and get rewarded when they spend their Venmo balance."
That's entertainment
That is not PayPal's only sporting and entertainment outlet, either. In Canada and many other online gambling markets, PayPal is the payment partner of choice for millions of iGamers. Adam Ryan, expert from Casino.org, explains that this is because of the levels of trust that players have in the brand and what it signifies to them when choosing an online casino.
"When iGamers are deciding where to play, they have some serious considerations to take into account. While an outsider might assume it is all about game choice, what people want above all else is to know that the online casinos offer secure payment options and fast withdrawals. This is what recent polling by Ipsos revealed. What we have consistently found is that the best online casinos that accept PayPal deliver on both of those counts, and on a raft of others too."
Moving into crypto
Crypto advocates have welcomed PayPal's moves to integrate cryptocurrency into the payment platform. It is an innovation that sets them apart from some of the existing platforms that are still vacillating. In contrast, PayPal has made it easier for people to use cryptocurrency by integrating it into everyday commerce, allowing holders to pay with digital currencies at millions of merchants. The familiarity of the platform is a trust mark for both merchants and buyers. With over 25 years in digital payments, merchants who may have been 'crypto-shy' are reassured that these are safe currencies in which to transact. Not only are consumer choices expanded, but it has also allowed merchants to tap into this growing market.
Here at Coinpaper, we might be comfortable and familiar with how the market works as we enjoy maximizing passive income, but many others still need convincing. Therefore, having a frontrunner like PayPal working with the market is reassuring for the crypto stalwarts. However, it may still take a little while for the more cautious to catch up, and a significant element of the financial market is nothing if not careful. Prudent or not, even the most risk-averse investors have started to be swayed by the potential of crypto, particularly stablecoin options.
Being part of the explosion
Cryptocurrency has witnessed explosive growth, and total holdings now surpass $3.25 trillion. That is over half the size of the projected 2024 global retail e-commerce market. There are an estimated 20 to 60 million monthly active crypto users, indicating a vast potential for transacting in crypto. PayPal says that there are still many hurdles to overcome, as merchants are hesitant to integrate new, potentially costly technologies that might not deliver a return on their investment. However, the introduction of PayPal into the mix can provide comfort on both sides of the transaction.
However, it is not comfort that PayPal are looking for. They will hope that by being a leading transaction platform for cryptocurrency, they can regain some of their early mover advantages when it comes to market value.
