Paypal Outline - Lizi Chen PDF

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Leila Deluty Paypal Outline

1. General information and history about the company and its history a. Founded in 1998 by two major business technology entrepreneurs, Peter Thiel and Max Levchin. b. Originally named “Confinity” not Paypal. Cofinity had a competitor, called X.com founded by Elon Musk, they eventually merged to take over the payment industry. c. This company believed in easy, paperless payment for customers and companies through the internet. d. This was one of the first companies to focus on a field like this, especially during a time when internet business, banking, and payments were starting to become such a big thing. e. The main idea of this company was for users to sign up, provide their name and personal information, and then be able to make quick payments through email for a very low cost. f. The company became very popular and successful extremely quickly, and they eventually renamed it Paypal when the founders decided to focus mainly on making payments over the internet. g. “Simply put, PayPal is a fast and convenient method for sending and requesting money online. With PayPal, there’s no limit to who you can send or request money from. Most online stores, public auction websites and shopping websites even use PayPal, like eBay and Amazon.” https://www.zippia.com/advice/how-does-paypal-make-money/ h. Ebay and Paypal split into two different companies in July of 2015, but still agreed to keep a close relationship until mid-2020. 2. Business category, markets, and products (what is the company in the business of doing, what do they sell, what do they do well and how do they make money) a. Paypal deals with online easy payments from business to consumers. b. Originally they were focused on payments through email, but then realized that the internet, businesses, and their consumers needed a platform the support their “ewallets” c. Paypal made paying on d. line easy and quick, by customers supplying their name, credit card, and email address, and having them be able to pay with a click of a button. e. This technology was the most successful of its kind at the time f. They make money two different ways

They charge fees to the payment recipient, merchants with business or premier accounts are charged a fee for each of their transactions. ii. The second way is that the company earns interest for any money that is left sitting in a user’s account. g. Paypal is in partnership with some of the biggest online merchants like amazon and ebay (owned and purchased by ebay in 2002 for $1.5 billion) h. They are very good and well known for the online transfer of money through its stable and reliable, and safe payment systems. 3. Size (revenue, rankings), # of employees, major locations, headquarters, major divisions i.

a. In 2019 its revenue was 17.77 billion dollars and ranked 204th on the b. c. d. e. f.

2019 Fortune 500 of the largest United States corporations by revenue. PayPal - Wikipedia PayPal currently has 286 million active users Paypal has around 22,000 employees PayPal's corporate headquarters are located in the North San Jose Innovation District of San Jose, California operations center is located in Omaha, Nebraska Paypal had expanded tremendously and has has 47 office locations across 27 countries

g. Subsidiaries are Venmo, Xoom Corporation, Honey, Braintree, iZettle 4. Mission statement and company objectives/goals (what is it and how are they achieving it)

5. es an equal opportunity to participate in business and society to further their lives (Paypal INC.). Their mission- “Build the web’s most convenient, secure, cost-effective payment solution, build the web’s most convenient, secure, cost-effective payment solution”, their vision - “Democratize financial services”, and their tagline - “There’s a New Money in Town; Paypal is New Money” (Paypal INC.). Paypal values inclusion and taking care of those around you as well as yourself - “We are One Team, valuing inclusion and collaboration, demonstrating integrity, trust, respect and empathy (Paypal INC.). We take care of ourselves, each other, and our community (Paypal INC.). Wellness: Care and actively support each other’s well-being. Create a super energizing workplace that brings out the best in our employees by nourishing our mental, physical and emotional balance.” Working together as a team, or collaboration is another virtue that Paypal implements; “collaboration: Work as a team, drive ownership and accountability, make decisions and get results . Foster trust, have integrity, champion each other and have each others’ backs. Eradicate silos and win as a team” (Paypal INC.). Paypal is constantly trying to improve their company, do better for their employees and their customers; “innovation: Create amazing experiences for our customers – whether merchant, consumer or the PayPal community. Think differently, look end-to-end and practice empathy by putting yourself in our customers’ shoes.” Lastly, Paypal stands for inclusion, the acceptance of everyone (Paypal INC.). “Inclusion: Respect and value uniqueness and diversity of thought. We’re talking to everyone, everywhere, at all times, regardless of background, level or circumstance. Ideas are richer and execution is stronger when everyone feels included” (Paypal INC.).

a. Mission- “Build the web’s most convenient, secure, cost-effective payment solution, build the web’s most convenient, secure, cost-effective payment

solution” b. “As a leader in Financial Technology, we believe in providing simple, affordable, secure and reliable financial services and digital payments that enable the hopes, dreams and ambitions of millions of people around the world.” c. “We believe that now is the time to reimagine money, to democratize financial services, so that managing and moving money is a right for all citizens, not just the affluent.” i. https://www.paypalobjects.com/digitalassets/c/website/marketing/gl obal/shared/global/media-resources/documents/paypal-missionvision-values.pdf d. Paypal wants to make the field of online payments fair and available for all, not just the wealthy and the upper class. Rather, they want to redefine the online consumer business relationship, with their easy and affordable payment method. They are reliable, dependable, and easily accessible to all 6. Competitor analysis (who are their competitors and what kind of competition is it and what threat do their competitors pose) a. Some competitors are Stripe, Square, Shopify Payments, Amazon Pay, and Braintree b. They are all online payment forms that each offer different similar functions as paypal. Some have their own companies and offer different things than paypal i. Stripe is a quickly developing startup that even verges on equaling that of PayPal. 1. PayPal funds are stored in your PayPal account and not paid out directly to your bank account. However, after the first Stripe transaction, revenue will transfer directly to your bank account after a purchase is made. 2. PayPal will be the better option for small businesses, given their simple setup and ease of use. Stripe is a good option for larger businesses, as they offer more customization and additional features. 3. PayPal is a trusted name and incredibly easy to use, but Stripe offers a deeper feature set thanks to powerful developer tools. ii. Square - Square Point is an app where employees record their start and end times of work and set up direct deposit. In addition to its use for payroll it can also provide loans to small businesses, where the business has the option to pay back the loan using a percentage of daily sales made through the app itself. 1. Square offers no touch examining for face to face installments 2. The primary contrast between the two is that the PayPal card peruser acknowledges chip, contactless AND attractive stripe cards, while the referenced Square Reader just

acknowledges chip and contactless installments 3. Ultimately, although Square and PayPal can provide your business with similar functions for around the same price, Square is better for smaller and in person businesses. iii. Shopify has lower preparing charges Shopify Payments acknowledges Visa, Discover, Mastercard and American Express. Installment subtleties are adjusted with each Shopify request, making it simple to take see information across the board place. 1. The organizations have altogether different plans of action. PayPal brings in its cash from the expenses it gathers each time purchasers and shippers utilize its administrations for monetary exchanges. In the interim, Shopify sells cloudbased administrations that permit organizations to sell their own items and administrations on the web. 2. Shopify has no exchange charges Shopify and is an internet business stage, which means it's intended to assist you with building your online store. You pay a month to month charge to utilize its layouts and amazing deals devices, include items, and cycle online requests 7. 1-year stock analysis: stock prices and trend a. 2020 stock analysis i. On Jan 1 2020 a share in the stock market cost $110 and when the pandemic struck it plummeted to 85 dollars in March. Since the economy has been rebuilding itself, the stock price has now reached $185 reaching a much better amount than during the pandemic ii. PayPal stock reached a high during the summer months of the pandemic. iii. PayPal's drawn out development essentials are extremely strong. The progress from physical to online shopping — and by augmentation, the change from physical to computerized installments — has been in progress for quite a long while. That change has caused PayPal's volumes, incomes, benefits and stock cost to rise quickly. By shutting down physical shopping options and greatly increasing online shopping, Coronavirus definitively quickened this progress.

8. Financial information (Sales, profit, trend of financial performance etc.) Compare the last 3 year’s financial information and report the financial performance changes (if any) Current Business strategy (growth, downsizing, stability etc.) a. For financial year 2019, Paypal revealed income of US$2.459 billion, with a yearly income of $17.772 billion, an expansion of 15% over the past monetary cycle. PayPal's offers exchanged at over $108 per offer, and its market capitalization was estimated at over $127.58 billion in December 2019. b. PayPal Holdings annual/quarterly net income history and growth rate from 2013 to 2020. i. net income for the quarter ending June 30, 2020 was $1.530B, a 85.91% increase year-over-year. ii. PayPal Holdings net income for the twelve months ending June 30, 2020 was $2.583B, a 2.91% increase year-over-year. iii. net income for 2019 was $2.459B, a 19.54% increase from 2018. iv. net income for 2018 was $2.057B, a 14.6% increase from 2017. v. net income for 2017 was $1.795B, a 28.12% increase from 2016. vi. The all-time high PayPal Holdings stock closing price was 210.82 on September 02, 2020. vii. The PayPal Holdings 52-week high stock price is 212.45, which is 14.3% above the current share price. viii. The PayPal Holdings 52-week low stock price is 82.07, which is 55.9% below the current share price. ix. The average PayPal Holdings stock price for the last 52 weeks is 130.94. c. Four Aspects to PayPal’s Current Growth Strategy: https://blog.euromonitor.com/the-four-aspects-of-paypals-currentgrowth-strategy/ - copy of strategies

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“Always at the Centre of the Next Innovation- PayPal is always at the centre of the next payments innovation. The pioneer of the ecommerce space is now attempting to make inroads in other aspects, including both mobile and in-store payments. PayPal competes in virtually every corner of payments, from its popular online platform to plug-in devices that enable first-time card payments to the relatively new beacon technology that has the potential to revolutionise the entire consumer shopping experience. There are certainly not many companies in payments today that have the breadth and depth of PayPal’s current offerings. The payments space today is changing fast and for all the emerging payments options on the market today, PayPal has a product to compete. Bridging Digital and Physical Commerce- PayPal aspires to be at the centre of virtually every payment transaction, whether it unfolds online when the consumer is sitting in front of a computer screen, via a mobile device when the consumer is on the go or in a physical retail store. It wants the end-consumer to opt for PayPal no matter the scenario. To do so, PayPal aims to build an agnostic platform that will allow retailers or software developers to leverage PayPal’s network programmes and hardware to create applicable products to capture these on-the-go payments. PayPal envisions consumers using a PayPal-enabled wallet for all payment transactions, regardless of if they occur through its popular online platform, via a mobile device or in a merchant’s bricks-and-mortar store. From Digital Wallet to Mobile Wallet to No Wallet - For PayPal, it is not just about the shift from the leather wallet to the digital wallet on a mobile phone. In many cases, it is about no wallet at all. For PayPal, mobile payments or payments on the move are often not about the ability of the mobile phone to conduct a payment, but about the ability for consumers to make payments without having to rely on cash or plastic cards while mobile themselves. PayPal’s head of global communications went so far as in autumn 2012 to ask the media not to refer to PayPal as a “mobile payments or mobile wallet company, but just PayPal.” PayPal wants simply to be known as a commerce company. For PayPal, mobile payments or payments on the move is often not about the ability of the mobile phone to conduct a payment, but about the ability for consumers to

make payments without having to rely on cash or plastic card payments while mobile themselves. iv. Re-Imagined Consumer Shopping Experience - Part of PayPal’s biggest bet is on creating an in-store experience in which frictionless payments become the cornerstone. PayPal hopes this experience will be a major selling point for consumers who are still on the fence about executing payments through these new channels. Together, its revamped mobile wallet and the introduction of PayPal Beacon in autumn 2013 gave users insight into PayPal’s future vision. PayPal hopes that in time both merchants and consumers will recognise the value of its product line because of its ability to create a differentiated and frictionless payment experience across all channels, all devices and all methods of payments.” 9. Management practices (How is the company structured. Policies? Hierarchy? etc.) a. 2000-2002. Before Paypal was bought by Ebay, it had a simple and organized structure. i. Peter Thiel was CEO ii. COO was David O Sacks and he was in charge of operations, product, and design. iii. CTO was Max Levchin and he was in charge of engineering iv. CFO Roelof Botha oversaw finance v. EVP Reid Hoffman oversaw strategy and partnerships. b. Marketing was originally part of the product group, but overtime it became its own group that was under the supervision of Sacks. c. Customer service was based in Omaha, Nebraska and the other parts of the company were based at the headquarters in Silicon Valley. d. The nature of the company was anti-meeting, based on individuality and priority. There were few groups of management and bureaucracy. People would propose their ideas and then consult their direct superiors and work within their units to execute their plans. e. List of Current Roles in the Company i. Daniel Schulman (President & CEO) ii. Steve Allocca (VP & General Manager, Global Gredit) iii. Eran Arbel (Head of Consumer Products) iv. Nicholas Beardsley (Global Strategic Partner Development) v. Marc Elbirt (Principal Strategist and Product Lead) vi. Trent Adams (Director of Information Security) 10. Marketing Practices (What kind of strategy do they employ? Cost/Quality/Niche?) a. https://www.marketing91.com/6-advantages-segmentation/ b. Segmentation helps in grouping the market in smaller groups having

same or similar taste/ preferences/ choices. Paypal uses psychographic and demographic segmentation strategy to target different customer segments. c. Differentiating targeting strategy has been used by Paypal to address the changing needs of the customers. d. It uses product class positioning strategy in order to create appropriate brand visibility in the different markets globally. e. while PayPal continues to expand its user base via partnerships and focuses on monetizing Venmo's transaction volume, it's also rapidly becoming a notable venture capital investor in multiple e-commerce and fintech disciplines 11. Current Issues and recent events affecting the company, either positively or negatively

a. During COVID 19 PayPal revenue shot up 22%. Even though this b. c.

d. e.

f. g.

pandemic jeopardizes the country’s economy, this company remained as successful as it has ever been. Paypal even accommodates its users during the pandemic by allowing lateness and flexibility in payments for small businesses. Dan Schulman said on CNBC, ““We’re basically trying to give small businesses the flexibility to deal with the issues they have right now” during the pandemic. He added: “We’re one of the largest providers of working capital for small businesses, and we’re going to continue to provide that when we can.” i. We see that even during a difficult time, the company cared not about their rising profits and revenue, rather on the people who make it as successful as it is. ii. Schulman stated that customers would be allowed to ask for deferrals on the payments needed for their business loans and cash advances. Paypal users have been using online shopping and paypal everyday, as the amount of online shopping has skyrocketed due to the pandemic. Even though other online forms of payment, like tickets for events and traveling have reached an all time low, that has not had an effect on paypal and how often it is used. June has been one of the most important months for the growth of Paypal since it split from Ebay in July of 2015. Between April and June, PayPal recorded $221.7 billion worth of user transactions on its platforms, up 29% year over year from $172.4 billion. The company also had its strongest user growth on record, adding 21.3 million new net active accounts in the quarter. -

https://www.cnbc.com/2020/08/13/the-pandemic-has-made-paypalmore-relevant-than-ever-before-ceo-says.html 12. Recommendations, future prospects, managerial implications (Buy/Hold/Sell on the company and why) a. Paypal has proved itself recently as an extremely successful

and profitable company, even amidst a pandemic. The evolution of digital payments is impacting the world and is a secular growth trend. b. The spreading coronavirus heavily impacted the fortunes of payments processors. Global quarantines and social distancing will sharply affect businesses, as consumers stay home. On Feb. 27, PayPal warned of lowered March quarter revenue forecast due to the coronavirus. c. In the latest quarter — reported on July 29— PayPal's earnings rose 49% vs. a year earlier to an adjusted $1.07 a share. PayPal revenue climbed 25% to $5.26 billion in the three months ended June 30, the company said. d. Shares of PayPal rose 0.91% to $193.07 at Thursday’s close. The stock is up more than 78% year to date.

e. PayPal boasts a consistent track record of earnings and sales growth, stretching back to at least 2010. In that year, it earned a mere 29 cents per share. In 2019, the company reported EPS of $2.96 per share. For 2020, analysts expect the firm's earnings to grow 9% to $3.24 a share and another 19% to $3.85 in 2021.

https://www.thestreet.com/technology/history-of-paypal-15062744 O'Connell, Brian. “History of PayPal: Timeline and Facts.” TheStreet, 26 Aug. 2019, www.thestreet.com/technology/history-of-paypal-15062744.

https://fourweekmba.com/how-does-paypal-make-money/

by, Published, et al. “How Does PayPal Make Money? PayPal Business Model In A...