PayPal Wants To Be The “Super App” – The Financial Amazon

PayPal is gearing up to introduce a number of new features in the third quarter as its management sees the company’s future in a “super-app” concept that goes far beyond just payment.

PayPal (PYPL) has emerged as one of America’s leading digital payment companies over the past six years under the leadership of Dan Shulman.

Today, the market value of PayPal is approaching $ 300 billion, more than Citigroup (C) and Goldman Sachs (GS) combined. The annual volume of payments passing through the PayPal platform exceeded $ 1 trillion, and the number of users at the end of March 2021 reached 392 million.

PayPal’s recent Q1 report came under the motto of a successful expansion in the cryptocurrency space with the launch of the PayPal Cryptocurrency service. However, this is far from the only new area in which the company plans to develop.

PayPal announced that it will introduce new services in the third quarter of this year, which may include high-yield savings accounts, check cashing services and stock investing opportunities.

All of this suggests that PayPal plans to go beyond the boundaries of payment and strives to become similar to such “super-applications” as: Chinese giants Alipay or WeChat, Indian Paytm or Singapore Grab.

Dan Shulman, speaking about his company in an interview with the media, hinted that he wants to turn PayPal into a “one-stop shop for shopping and finance”, so that the company’s application becomes such an integral part of the lives of consumers in the United States as Amazon (AMZN), Google (GOOG, GOOGL ) or Facebook (FB).

Shulman says his phone has 40 to 50 different applications – from drugstores to grocery stores and other stores – that are too many and inconvenient, as it requires entering information and passwords for each of them.

“There are too many apps on all our phones,” Schulman said. “There are actually only eight to ten applications that we use every day or every week. These applications will become what we call super applications. “

PayPal executives have acknowledged that becoming a super app is difficult and that PayPal isn’t the only company in the US aiming for it, but Shulman sees this as a chance.

Many traditional American banks, as well as the world’s largest payment systems, Visa (V) and Mastercard (MA), have long made acquisitions in fintech and are investing in digital payment functions. However, not everyone is lucky – for example, JPMorgan Chase (JPM), the largest US bank by assets, advertised its Chase Pay app for years, but it never became widespread and the company eventually closed the entire project.

Uber Technologies (UBER) opened a finance division in 2019 that included lending, digital wallet and instant payments for drivers. But after the restructuring and the decision of the company to focus on key segments, Uber downgraded and sold some of its divisions.

At the same time, there is a successful example of Grab Holdings, which started out as a taxi service in Southeast Asia, but with access to new markets and services of various delivery and car rental, expanded the scope of its business. Today, in addition to its core business, Grab offers financial services, digital payments, insurance, and even online hotel reservations. The Singapore-based company Grab is valued at nearly $ 40 billion and is preparing to go public.

Sanjay Sahrani, an analyst at Keefe Bruyette & Woods, said it would be difficult for PayPal to replicate the experience of Alipay or WeChat, but sees good opportunities to reach an audience that does not have access to traditional banking services. According to research by analytical firms, about 25% of the US adult population has difficulty accessing basic financial services.

According to the gene. director Dan Shulman, to become PayPal’s “super app” needs to be huge.

“At least half a billion to 1 billion people. One billion people would be ideal, ”Shulman said.

However, PayPal already has a user base of 392 million, which is close to 500,000,000. Considering PayPal’s high user growth, interest in its cryptocurrency service and the upcoming launch of new features, the 1 billion figure seems quite real.

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