BUS project outline

PayPal Company

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PayPal Comes In Light On Revenue

Value Proposition

PayPal is one of the most trusted marques that deal with electronic commerce. It facilitates payments between parties via online transfers. Not only does it have many users, but it also offers a variety of services which include: pay flow, payment gateways, online invoicing, PayPal shipping, among others.

The system used is very secure, and it is easy to transact as long as you have an account. Currently, PayPal is among the most profitable companies globally as most merchant company that allows individuals transact daily by accepting payment in different currencies.

Profitability

After the outbreak of the pandemic, Paypal improved its profitability. Since 2020, the company's profit has dropped. According to Sigalos (2021), the shares declined by 8% in extended trading. In its second quarter, Paypal's net profit decreased to 23% from 2019 to $1.18 billion in 2020. However, the organization received 11.4 million new functional accounts. Its total active accounts became 403 million. The profit increased by 19% in 2020 in its quarter that ended June 30, 2021. This increase resulted from the pandemic that instigated a rise in online shopping, driving huge payments in 2020.

In 2020, the total payments increased by 40% to $311 billion, while the Venmo app, which started backing cryptocurrency services in April 2020, saw revenue rise 58% to $58 billion (Sigalos, 2021). Also, mobile transactions pushed the firm into crypto in 2020, enabling customers in the United States to purchase, sell, and invest in cryptocurrencies. With its chain of 32 million merchants, its crypto ventures have placed it as a close competitor to Coinbase.

SWOT Analysis Strengths

Paypal's primary strengths for leveraging to come up with a new product or service are a highly secured online network, availability of 24 currencies worldwide, market coverage of at least 190 markets globally, and at least 153 million online active accounts (PayPal Holdings, Inc., 2020). A secured online infrastructure implies that any new online service will have its information securely transmitted across the internet without experiencing cyber crimes such as hacking.

More currencies worldwide enlarge its operational scope for introducing new transaction services to its widely covered market, consisting of more than 153 million online account users (Karr, 2020). These users offer a good market for the new product launch and guarantee success worldwide.

Product or Service Singularity

The new service allows active online account owners to purchase, hold and sell cryptocurrency directly from PayPal account.

To attain the success of this new service, the company outlined its plans to substantially increase the utility of cryptocurrency by making it an available source of financing transactions at its 26 million business operators globally (Karr, 2020).

Initially, limited utility as an exchange tool has undermined the use of cryptocurrencies because of volatility, expenses, and efficiency to transact (PayPal Holdings, Inc., 2020). However, due to high-tech platforms that allow mainstreaming digital currencies, this new service will be successful. Overall, this service will enable PayPal users to use cryptocurrency holdings to source funding to pay at PayPal merchants worldwide.

New Product or Service Projections

Currently, the company leads its competitors such as Stripe, Amazon Pay, and After-Pay in terms of market share. From 2020, the company started to dominate online transactions with over half of the market share. For instance, it has 426,954 sites, a market share of 54.48% globally. Its close competitor is Stripe that has 145,565 sites, an 18.57% market share (Karr, 2020). With more than 200 million PayPal users, 1.7 billion business transactions, and 16 million merchant accounts, the company has become the largest online payment system (Karr, 2020). It earns about 4.2 million dollars per month, ranking among the most moneymaking companies worldwide.

Due to this large market share, if PayPal starts offering loans to its millions of active account users who transact frequently, the profitability will improve. Millions of these active account users may want to pay for purchased goods or services but fail to have sufficient money in their accounts.

Thus, if the company gives them credit, and upon the next deposit, the loan gets deducted, the new service will guarantee improved profitability. Through this, the monthly profit margin will increase from 2.6% to about 3% per (Karr, 2020).

References

Karr, D. (August 3, 2020). PayPal Market Share Statistics And Its History of Dominating Online Payment Processing.

Liu, R. (2020, December). Research on the Export Development of Small and Medium-sized Enterprises Cross-border E-commerce: Based on SWOT analysis. In 2020 International Conference on Big Data Economy and Information Management (BDEIM) (pp. 112-115). IEEE.

PayPal Holdings, Inc. (October 21, 2020). PayPal Launches New Service Enabling Users to Buy, Hold and Sell Cryptocurrency. https://www.prnewswire.com/news-releases/paypal-launches-new-service-enabling-users-to-buy-hold-and-sell-cryptocurrency-301156880.html

Sigalos, M. (2021). PayPal comes in light on revenue; profit drops from last year. CNBC https://www.cnbc.com/2021/07/28/paypal-pypl-earnings-q2-2021.html