PayPal began trading today as an independent company. No longer is PayPal affiliated with eBay.
And what a day it has been! PayPal ($49.5 billion) is valued above Netflix ($47.1 billion), eBay ($33.7 billion), and Twitter ($23.9 billion). The company is a powerhouse and shows no sign of giving up to the new players in town.
Since the early 2000’s, PayPal has been the go-to service for internet entrepreneurs and eBay shoppers. PayPal earns praise for its ease-of-use and ability to make international bank transfers with ease. Services such as Venmo and Braintree are popular alternatives for many. However, they are both owned by PayPal. Neither of which do global transactions. Xoom does international transactions but was acquired by PayPal earlier this month. It seems PayPal would rather spend money to eat up the competition than lower their fees.
The problem with PayPal is that many people believe the company has grown complacent over the past decade. Even PayPal founder Elon Musk said PayPal is still full of mistakes he intended to fix if he hadn’t sold the company to eBay. Elon Musk also says PayPal fees are outrageous. Most users agree but PayPal is about the only way to easily transfer money internationally.
Many PayPal users agree with Musk. PayPal currently takes 2.9% plus $.30. That may not seem like a lot. But for someone who uses PayPal every day, that amount will quickly become depressing. Someone running an online business will likely receive most of their payments through PayPal. Should that business person earn $100,000 in a year, they will have to pay $2,900.30 in PayPal fees alone! That’s before they pay taxes and other business expenses. PayPal is expensive and there’s a lot to be improved on. It’s why the world is paying so much attention to PayPal’s recent rise to independence. Hopefully things change. Hopefully fees decrease. But what does the future of PayPal look like from a user’s perspective? Why should we care about PayPal’s new-found independence?
First off, eBay will still be PayPal friendly. They have promised that 80% of sales in the eBay Marketplace will still be routed through PayPal for the next five years.
However, PayPal is seeing some stiff competition elsewhere. With more and more money to be made in the digital Wild West, the competitors are flocking. PayPal must face competition from Apple Pay, Android Pay, Stripe, and others. Hopefully this drives fees down for consumers. The trick for the other users will be to gain market share from enough big online players that everyone begins to slide away from PayPal. Many people want to leave PayPal but there’s just no good alternative for making online purchases or international payments. Many companies only have PayPal accounts.That’s how successful PayPal has been.
At this point, PayPal has made no announcements for change. It seems PayPal is just proud of who they are, rather than what they may become. A quick visit to PayPal.com just shows that PayPal has gathered a massive share of the digital money transfer market space.
We will keep an eye on the future of PayPal. Hopefully either fees go down or the stock price goes down.