When two large companies begin to do business together, people tend to pay attention. For instance, when a company as large as Kroger buys another company or begins doing business with Albertsons, people notice.
There has been a buzz around two huge companies and a potential partnership. PayPal and Visa may be joining forces, according to Investors.com. However, SunTrust said it has still yet to be seen whether or not the two companies can come to an agreement.
Traditionally, PayPal has offered customers a way to link to their bank account or pay directly through PayPal. However, adding in a credit card with the company could significantly help PayPal’s growth efforts. Analysts from the investment bank (SunTrust) say that the deal could potentially bring PayPal an additional $300 million in transaction expenses. The only problem is, for PayPal to take on these additional expenses, they would have to see lifts in payment volume or volume from its cheaper funding sources.
PayPal stock has been doing well in recent months. They’ve showed plans to continue building the company and even planned to have a headquarters in Charlotte, N.C., prior to the HB2 bill being passed. The company is ranked among the top 9 percent of all the stocks when it comes to earnings and growth. Much of the company’s performance in the stock market this year thus far points to having a successful Q1.
The company, which thrives from e-commerce has been taking on a few heavy competitors recently though. Visa and PayPal have seemingly been going head-to-head for some time. PayPal is the new way to pay, while Visa is much more traditional in nature.
More recently, Amazon.com began to gun for PayPal with an announcement about its new way to pay. The online superstore hopes to launch “Amazon Payments,” which will allow for Amazon customers to use Amazon to pay for things on other e-commerce sites. This is a part of a three-year effort by Amazon to continue to grow its payments department. The company hopes that people will begin to use Amazon Payments versus other forms of paying (when online).
The deal with PayPal and Visa may be what saves PayPal if Amazon Payments really takes off. If PayPal decides to pair with Visa (or Mastercard) to start a line of credit for its customers, it will be able to stay afloat in a world that seems to be taken over by Amazon. However, if it decides it will not benefit from the deal, PayPal may have trouble keeping people on board.
PayPal does have a few things going right for it though. Many companies use PayPal to pay its freelance employees (i.e. writers and remote workers). It is also a great way to send last minute cash gifts, pay for items online and even pay at some checkouts in store. The website has certainly grown since it was first launched (its biggest partnership at the time was eBay). However, there needs to be continued growth or the company will fall underneath concepts like Amazon Payments in the future.
Photo: Flickr: G.L. Barone