Paypal Emerging as Fintech's Biggest Winner Amidst Pandemic

PayPal, the global online payments platform, is challenging the traditional banking system in response to the surge in e-commerce caused by COVID-19 pandemic lockdown measures. Since the pandemic began, PayPal has boasted two record-breaking quarters, adding 1.7 million new merchants and 21.3 million new accounts between April and June of 2020.

As a major facilitator of e-commerce, PayPal was well positioned going into the pandemic. The company has attracted significant numbers of merchants, including new partnerships with The Gap and DoorDash – the largest food delivery service in the United States. Dan Schulman, President and CEO of PayPal, believes PayPal’s business has never been more relevant. During an earnings call, Schulman explained that the substantial macro changes from the pandemic have led merchants to embrace a “digital-first strategy” that has fueled the rapid rise of digital payments.

Unlike many businesses, PayPal has not been forced to pivot its business model during the pandemic. Instead, the company has leveraged its reputation as a secure and reliable payments processor to increase its market share and even introduce new services that compete with traditional banking services. In the United States, PayPal was tasked with deploying some of the $350 billion in Paycheck Protection Program funds on behalf of the US Government, demonstrating the fintech leader’s significant advantage over traditional banks when it comes to updating their services to meet rapidly changing consumer demands.

PayPal has introduced several financial solutions that have eluded traditional banks, such as the Pay in 4 function, which allow users to finance payments over four interest-free instalments with participating merchants. In addition, the company has rolled out QR-code enabled payments to better facilitate in person, contactless payments. Both services leverage the company’s native ecosystem to offer built-in features that allow customers to complete their financial transaction all in one place; PayPal’s trusted, widely used interface.

Shulman believes this is only the beginning. He stated, “these are durable and meaningful tailwinds, and we are fortunate to have the scale, scope of services and brand reputation to capture the benefits of these trends and extend them to our customers.”

Author: Kyle Jacobson