PayPal’s future could be brighter than ever before…
Using cash has become almost obsolete. Going to the ATM to take out money and have some cash on hand is a thing of the past.
And that’s because, over the past few years, the rise of payment apps has been steadily increasing. Why make an extra trip to the bank when you can easily send someone money — or receive money from someone — through a few simple taps on an app?
The convenience is undeniable. And that’s what has played the biggest role in the rise of going cashless.
You could say it all started with PayPal (NASDAQ: PYPL). The company was one of the first digital payment platforms. It allowed for a different way to pay for items online. eBay and PayPal once had a strong relationship because of that but have since dissolved their partnership.
The digital payments sector has been a little mild over the years. But within the past year, the competition in this sector has been heating up.
PayPal aims to be a strong leader in the sector, and it wants to become the go-to digital payment platform.
The company is so confident in this sector and working toward being a market leader that it recently made a huge purchase. PayPal spent $2.2 billion on European payment company iZettle.
This is PayPal’s biggest acquisition to date. It’s focused on becoming a market leader and wants to have an even bigger presence in digital payment services. The company knew that buying iZettle would be its chance to expand further into the sector and continue growing its business.
It was an all-cash deal. But why did PayPal pay such a high price for the company? Well, iZettle is going to help in expanding PayPal internationally. And it’s going to finally give PayPal a more direct approach with mid to small businesses.
Those types of businesses would unleash a customer base that PayPal has been having a hard time reaching…
iZettle
The company offers payment services in Europe that are similar to Square’s. A partnership with iZettle will mean PayPal will have access to iZettle’s small wireless chip readers and its other payment processing products.
Another benefit of iZettle is one of its recently launched products. The product is a platform that makes it easier for small businesses to build their own online stores.
In a recent interview, iZettle CEO Jacob de Geer said:
I think it’s important to clarify that since we started the company in 2010 we’ve been doing a lot of work with PayPal and the team at various capacities in terms of cooperation and partnerships.
We’ve been struggling all along to get to the vision we’re aiming for in terms of helping small businesses and competing with the giants, and PayPal has in the area of 20 million merchants whereas iZettle has 500,000.
Both of these companies have been working together for some time. They both understand each other’s strengths and weaknesses, which will make it easier for them to build a stronger, cohesive business as a whole…
A Strong Future Ahead
This past week, Stifel analysts had this to say about the company:
PayPal is well-positioned to benefit from e-commerce growth and the digitization of payments and is broadening its leadership position through its global scale and controlling the end-to-end experience.
When eBay and PayPal’s partnership split up, it seemed like that would be the downfall of PayPal. But now, we see that’s not the case at all. PayPal’s potential is there. And as long as it remains focused on how to gain the market, it’ll have a profitable ride.
PayPal is on the path to dominating a market that’s only now starting to take off. The time for PayPal to take action and mark a spot for itself has arrived. And that’s exactly what it’s doing…
Until next time,
Jennifer Clark
Pro Trader Today