With so many alternative payment solutions out there, can PayPal still stand out and offer a unique service to businesses looking to diversify payment options for clients? Spoiler alert: yes, it can. And here is why.
The origins of PayPal
PayPal was established in March 2000 with the aim of streamlining money transfers over the Internet. It was the product of the merger of an original e-commerce service dubbed Confinity, created in 1998, with online banking pioneer X.com. The latter was founded by none other than Tesla CEO Elon Musk, who immediately recognized the merit in the new venture.
PayPal’s success and mainstream adoption are largely owed to its close ties with eBay, which purchased the service for $1.5 billion in 2002, and held it until 2015. That year, PayPal was relaunched as an independent provider but remained a key payment solution used by eBay. In the years since then, PayPal has continued to grow, purchasing alternative payment platform iZettle in 2018, and partnering up with social media brand Instagram in 2019.
One of the main reasons that have made PayPal so popular with an ever-growing number of businesses and online merchants, is that it focused on providing added security to transactions from the very beginning. It has put in place sophisticated cyber security solutions to prevent identity theft and phishing, exploring the use of a portable key as part of its two-step initial verification process to authorize payments from your PayPal account. It also offers the option of contesting fraudulent transactions and even receiving a complete refund. Finally, it has implemented its own security protocols that detect suspicious transactions based on behavioral patterns, including sudden spikes in volume, and can act to suspend accounts on its own to protect customers.
Why does PayPal still dominate over 50% of the market?
This fact is why it is widely adopted by sectors that deal with large volumes of transactions every day. One of the leading software brands, Microsoft, accepts PayPal across a suite of services, including Xbox products, while sports brand Adidas and entertainment company Disney also both utilize the service. In the casino industry, Betway Casino uses PayPal as a trustworthy payment solution to process large volumes of daily deposits by players. In the online retail sector, while ASOS, Footlocker, and Calvin Klein all use the digital payment provider, it is safe to assume that the only reason leading brand Amazon does not directly provide for payments on a PayPal account is because the company launched competitor service Amazon Pay in 2007.
As such, Amazon still hopes to gradually claim a larger share of the market still dominated by PayPal. Yet that is not true for every competitor: while Apple has also launched its own payment platform, dubbed Apple Pay, it is still accepting payments in PayPal for Apple ID users – including the iTunes store. If you are considering adding PayPal as a payment solution on your online business, or if you are contemplating whether it is worth paying the account fees, you need to be mindful of the fact that PayPal can offer a high level of security than several smaller alternative payment solutions.
Its reputation as a very security-focused brand is also why offering PayPal can work really well in terms of digital marketing for your company. Compared to other providers, PayPal consistently ranks in the Fortune 500 index, which includes the top 500 US companies with the most revenue. These collectively represent over 66% of the total US GDP, valued at $22.6 trillion, and bringing in $13.7 trillion in revenue, while making up for some 28.7 million jobs across the globe.
This puts PayPal in good company with brands like Apple, Walmart, and CVS, which currently top the Fortune 500 charts, as well as oil and gas conglomerate Exxon Mobil and telecom giant AT&T. It also illustrates that the company is a stable service provider; one that is extremely unlikely to go bankrupt on you or leave you hanging.
Its almost ubiquitous presence and stellar reputation mean that offering PayPal payments can work as an appealling factor for your company, especially when targeting foreign-based clients. Most of your clients that do not wish to pay with their credit card will already have set up a PayPal account for their international payments. PayPal currently dominates 58.43% of the market, followed by Stripe at 16.49%, and Amazon Pay at just 3.51%, with all other payment providers representing less than 3% of the market.
Offering alternative payments can lead to increasing awareness of your brand by foreign clients who seek to avoid hefty currency conversion fees. Coupled with its established focus on cybersecurity, it can become another attractive point in your digital branding across international markets.
Until one of the newcomers becomes a true contender in the alternative payments market, PayPal is still the wisest option for most online merchants wishing to expand their international and domestic reach.