Deep Dive: PayPal
- PayPal is one of the seminal financial services companies of this generation.
- Here's a deep dive into PayPal's products, business, and company.
PayPal is a global payments network and technology company that facilitates digital and mobile payments for consumers and merchants. PayPal’s payment technologies allow consumers and businesses to send and receive payments in person, online and across a mobile device. PayPal is available in more than 200 global markets and supports payments in more than 100 currencies. Consumers can withdraw funds in 56 currencies and hold balances in their PayPal accounts in 25 currencies. As of December 31st 2020, PayPal reported to host 377 million active accounts. comprising 348 million consumer active accounts and 29 million merchant active accounts.
PayPal was founded in 1998 by Peter Thiel and Max Levchin. Its headquarters are located in San Jose, California. It has around 50 offices in more than 30 countries around the world, including India, Ireland and Singapore. PayPal employs more than 23,000 employees from around 140 nationalities.
Products and Services
PayPal Cash and Cash Plus
PayPal offers two balance account types namely PayPal Cash and PayPal Cash Plus. A PayPal Cash account allows consumers to send and store money using their balance. Users can also shop in-store with balance through Google Pay and Samsung Pay. PayPal Cash offer money transfer money capabilities from PayPal Cash balance to Acorns for investments.
A PayPal Cash Plus account offers consumers the same features as a PayPal Cash account with some additional capabilities. These include FDIC coverage for balance through a PayPal Cash Mastercard in addition to adding money to balance in stores with the PayPal app. Cash Plus account holders can also get cash at Walmart with the PayPal app and can scan a check to add it to balance with the PayPal app.
The PayPal App enables consumers to send and receive payments in addition to tracking spending through push notifications. PayPal’s Xoom service allows customers to send payments directly to bank accounts and cash pick-up locations. The Xoom service is available in 130 countries. The app supports money collection efforts through PayPal Money Pools which requires a PayPal account and PayPal Cash or PayPal Cash Plus.
PayPal users in the U.S can buy and hold select cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and Bitcoin Cash directly within the PayPal app using a personal or Premier PayPal Cash/Plus account.
PayPal Credit and Cards
The PayPal Credit line provides 6 months worth of financing for purchases more than $99. Zero interest is applied if the purchase is paid in full within 6 months. Interest is charged to an account from the purchase date if the balance is not paid in full within the 6 month period. The credit line requires minimum monthly payments and is subject to credit approval.
PayPal’s Buy now, pay later feature called Pay in 4 allows consumers to make four interest free payments for a single purchase at millions of online retailers. Each installment has to be paid every two weeks directly through the PayPal app. The BNPL offering does not have any bearing on individual credit scores.
The PayPal Cashback Mastercard allows users to earn 2 percent cashback on each transaction. Cash back rewards can be redeemed to a user’s PayPal balance at any time without any redemption thresholds or annual fees.
The PayPal Extras Mastercard allows users to earn 3 points per $1 spent on gas and restaurant purchases, 2 points per $1 spent on PayPal and eBay purchases and 1 point per $1 spent on all other Mastercard purchases. Rewards points can be redeemed for gift cards, travel vouchers or as cash back to an account holder’s PayPal balance.
The PayPal Cash Mastercard is a debit card linked to a consumer’s PayPal Cash Plus account which allows users to withdraw cash from ATMs worldwide, including no-cost withdrawals at over 33,000 MoneyPass locations across the U.S.
The PayPal Prepaid Mastercard is a debit card which enables consumers to get paid faster through direct deposit. Users can add money to the card at more than 130,000 Netspend Reload Network locations across the U.S.
Buy and Shop
PayPal’s rewards program Pay with Rewards is available for eligible credit cards on purchases. The rewards can also be donated to support a charitable cause with PayPal Giving Fund. PayPal’s Buy now pay later capability allows users to make four interest free payments to support a purchase. PayPal’s acquisition of the online coupon aggregator Honey provides PayPal users with discount options at over 30,000 retailers.
PayPal’s solutions for small to medium sized businesses and enterprises consist of payments, credit, fraud protection, along with tools for accelerating growth, streamlining operations and managing risk. Businesses are provided access to PayPal’s consumer network of 348 million users around the world. Sellers can provide customers with payment experiences on mobile devices, their business websites or apps.
Business customers can pay through PayPal’s Buy Now, Pay Later feature through 4 interest free installments or through PayPal Credit. Other payment options include the use of PayPal’s QR code for touch-free payments and in-person point of sale payments through PayPal’s chip, tap, swipe readers and accessories.
Business financing options such as PayPal Working Capital provides business customers with loan financing based on PayPal account history without a requirement for a credit check. The fixed fee loans are automatically repaid with a percentage of each PayPal sale. The PayPal Business Loan option provides business owners with a term based loan with regular weekly payments. Additional business growth and operation streamlining tools include insights, cart recovery, dispute management and simpler shipping options.
Recent Mergers and Acquisitions
- Honey Science Corp
- Xoom Corp
- Hyperwallet Systems
- TIO Networks
- Swift Financial
- Google Pay
- Amazon Pay
- Apple Pay
- Shopify Payments
In its fourth quarter 2020 earnings release, PayPal reported its strongest total payment volume and revenue in PayPal’s history. The payments company indicated a 31 percent TPV growth to $936 billion. It also reported a 21 percent increase in revenue to $21.5 billion. It recorded a 95 percent growth in net new actives ending the year with 377 million active accounts.
According to PayPal’s website it has achieved 100 percent gender equity pay and U.S ethnic equity pay for four years in a row. In October 2018 PayPal launched its Diverse Hiring Initiative to recruit diverse talent at the director plus level. In 2020 the Diverse Hiring initiative was expanded to all roles to build greater inclusivity in the recruiting process.
PayPal supports a number of employee resource groups for its Black, Latinx, Asian, LGBTQ, differently abled and veteran employees.
Aliados is the employee resource group for PayPal’s Lantinx employees, aimed at building visibility, recruitment and advancement for its members. It also promotes community outreach by supporting digital inclusivity and education in local communities. Amplify aims at fostering professional advancement and inclusivity for PayPal’s Black employees. It facilitates mentoring, networking opportunities, cultural awareness promotion and the creation of business initiatives.
In 2018 PayPal earned for the tenth consecutive year a 100 percent rating from the Human Rights Campaign Corporate Equality Index, as one of the “Best Places to Work” for LGBTQ employees. The company’s LGBTQ network PayPal Pride hosts 16 chapters across six countries and is committed to building greater diversity and inclusion for LGBTQ workers.
In 2019, PayPal reported 43 percent of females in its total workforce in comparison to 57 percent of males. 35 percent of female employees held leadership positions such as director or vice president versus 65 percent of their male counterparts in the same positions. In 2019, the company’s total ethnic workforce consisted of 49 percent of white employees in comparison to 32 percent of Asian employees, 6 percent of Black employees, 8 percent of Hispanic employees and 5 percent of mixed race employees or employees from other races.
In 2019, PayPal matched 65 percent of the energy in its data centers with renewable generation in alignment with its goal of 100 percent by 2023. According to the fintech’s employee engagement survey of 2020, 84 percent of global employees said that they would recommend PayPal to their peers and that they were happy at the company.
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