Ebay, the parent company of PayPal, just posted its third-quarter results, and as predicted, the company is doing well, thanks in good part to PayPal. Ebay’s revenue is up 15% on this time last year, while its PayPal division is up 23%.
If you listen to PayPal’s competitors, its success just doesn’t add up. Developers think that PayPal’s tools are too complicated, and the primary value proposition of online and mobile payment startups like Braintree, Stripe and WePay seems to be that they’re like PayPal, only significantly easier to use. Merchants have long complained about PayPal’s hair-trigger fraud detection algorithms, which automatically freeze accounts due to “suspicious activity” that is anything but.
“Unlike PayPal, our customers rave about the service and what great support they get,” Braintree CEO Bill Ready recently said.
Yet the company just about prints money. That’s in part because, even as PayPal is being outflanked in what used to be its core business, it’s moving into the big time on things like retail point of sale terminals. For example, you can now pay with your PayPal account at thousands of Home Depot stores.
Here are eight reasons PayPal’s stock is up strongly since its second quarter report, and overall, the company’s stock price is now in spitting distance of its absurd highs of December 2004, when online auctions were still novel and eBay itself was a “cultural phenomenon.”
1. Paypal Is Big
About 117 million people have active PayPal accounts, plus millions of merchants, and PayPal processes 6 million transactions a day, says Anuj Nayar, director of global communications at PayPal.
2. PayPal Is Growing
The company has 13,000 employees, and yet it’s managing double digit growth every year.
3. PayPal Is Leading in Mobile
“We’re going to see $10 billion in mobile payment volume [in 2012],” says Nayar. PayPal doesn’t have a “mobile wallet” solution like Google and many other companies, which means all of those transactions were carried out via a conventional touchscreen interface on a mobile phone or tablet.
4. PayPal Has No Trouble Copying What Works
Square pioneered the small, white, square plastic dongle that plugs into a mobile phone or tablet, allowing anyone to swipe credit cards and get paid immediately. The larger, blue, triangular dongle known as PayPal Here is an obvious copy of it. But reviewers say that while the physical dongle is clunky, it does some things that Square’s doesn’t, and the service stacks up well when compared to Square.
5. PayPal Has Tons of Room for Growth
Online sales are 9% of retail, notes Nayar. Mobile means PayPal could capture way more of that pie, as users start paying for things with their phones and at the mobile phone and tablet-powered point of sale terminals that are replacing conventional cash registers. (In other words, offerings from PayPal Here, Square, LevelUp and others.)
6. PayPal Has Wisely Decided Not to Waste Its Time With Mobile Wallets
Mobile wallets, familiar to most of us as those “tap and go” payments systems enabled by smartphones, are something consumers can’t be bothered to adopt. “A lot of the solutions that are coming out [such as mobile wallets] are technology for technology’s sake and don’t seem to be solving any user problems,” says Nayar.
7. PayPal Doesn’t Care How You Use Its Service, as Long as You Use It
Its partnership with Discover could be a harbinger of things to come. The deal allows you to pay for things at any location that accepts Discover in one of two ways:
Customers can tap in their phone number and a special pin and Discover will process the payment, with the funds drawn from a customer’s PayPal account. At locations that don’t have a numerical pin pad, users can swipe a PayPal card.
8. The Company Has a New, Entrepreneurial President
Paypal grabbed David Marcus in a $240 million acquisition of his payments company Zong. He is hell-bent on personally improving customer service and internal development. The company recently went from nine different competing, scattered product and technology teams to one, says Nayar.
The larger point here is that, despite its age—14 years old is geriatric for an Internet company—and its nimble competitors, PayPal remains a strong competitor in digital payment systems, a field that is seeing explosive growth as everyone and their cousin attempts to challenge incumbents like Visa and MasterCard.
Image courtesy of Flickr, Steve Ganz
- How to watch the Super Bowl online, for free
- Nigeria’s giving Muhammadu Buhari—an ex-military dictator—what he’s always wanted: A chance
- This Michelin-star chef wants you to chew on this: No such thing as “Indian food”
- Software that can publish every draft of a book simultaneously shows the true beauty of the creative process
This article originally published at Quartz