PayPal: Riding The Global Cashless Wave

Aug. 31, 2020 11:00 AM ETPayPal Holdings, Inc. (PYPL)13 Comments
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Khaveen Investments
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Summary

  • PayPal is a leading digital payments platform that enables digital and mobile payments between consumers and merchants worldwide.
  • PayPal has built a complete payment ecosystem through acquisitions of companies involved across the payments stack, allowing it to achieve robust user growth year after year.
  • Secular trends towards digital payments globally will benefit PayPal as it takes advantage by forming partnerships with online and physical retailers for point-of-sales solutions.
  • We forecast revenue to grow by 17%, based on its share of the projected global transaction volume growth.

PayPal

Source: PayPal

PayPal Holdings (NASDAQ:PYPL) is undeniably one of the most successful Fintech companies. Initially providing payment gateway services on eBay (EBAY), it has expanded into a complete payment platform through acquisitions over the years. It now offers digital wallet and peer-to-peer (P2P) payment solutions, cross-border funds transfer, and credit lending. Its user base has been steadily growing. With a complete portfolio of payment solutions, it has witnessed strong growth of its user base with a market reach of over 200 countries. As the secular trends towards a global cashless society continues, digital transaction volumes will exhibit robust growth which benefits PayPal.

The company is taking advantage of this by expanding its footprint across e-commerce and in-store point-of-sale (POS) both regionally and in emerging markets. Its partnerships with e-commerce giants and retailers enable users to pay seamlessly with its platform. At the same time, however, the company faces the threat of new entrants from BigTech and rival Fintech companies. Nevertheless, the company offers a competitive edge as a secure end-to-end payment facilitator which is the most trusted platform by customers. As it continues to integrate its platform services to create more value, it is likely to continue adding users and increasing engagement and payment volume growth.

Source: S&P Global

Complete Payment Ecosystem

PayPal has one of the most unique business models within the payment industry. It has established a complete payment ecosystem through e-commerce expansion of its PayPal Checkout and acquisitions of third-party payment solution providers. This strategy has provided PayPal the ability to integrate many services around its gateway to increase its user base. Its most notable acquisition is Venmo, a leader in P2P payments among millennial users, allowing the company to expand into the mobile market. Besides Venmo, the company's other acquisitions include Braintree, Xoom, iZettle, Hyperwallet, Simility, GoPay and Honey.

This article was written by

Khaveen Investments profile picture
5.53K Followers
Khaveen Investments is a Global Macro Quantamental Hedge Fund managing a tactical asset-allocated portfolio of globally diversified investments. We have interests in 100+ investments across multiple asset classes, countries, sectors and industries. Our investment approach takes both a top-down and bottom-up approach encompassing macro-economic, fundamental, quantitative and technical analysis. We serve accredited investors throughout the globe, which include HNW individuals, SMEs, associations, and institutions. Our investment managers have decades of investment experience between them, with research expertise in emerging technologies such as Artificial Intelligence, Cloud Computing, 5G, Autonomous & ElectricVehicles, FinTech, Augmented & Virtual Reality and the Internet of Things.www.khaveen.com

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PYPL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: No information in this publication is intended as investment, tax, accounting, or legal advice, or as an offer/solicitation to sell or buy. Material provided in this publication is for educational purposes only, and was prepared from sources and data believed to be reliable, but we do not guarantee its accuracy or completeness.

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