This PayPal System is What Keeps The Company At The Top, Says CEO


PayPal Holdings Inc (NASDAQ:PYPL) is not losing to anyone. In fact, the online transfer giant is being strategic, or so it claims. While trendier and flashier platforms push the allure of personalization and user control, the company focuses on a two-sided system.

Paypal wants to serve buyers and sellers simultaneously. This does not require a focus on the elaborate conveniences offered by rivals. June saw Stanford C. Bernstein host another Strategic Decision Conference. The event brought Daniel Schulman, the company’s president and chief exec, forth to argue the advantage PayPal has by doing things the way it does.

This PayPal system is a winner, says CEO

Indeed, PayPal seems to be lagging in the wake of up-and-comers like Square and Apple Pay. It is not like the company goes without formidable platforms in the markets of instant fund transfers. However, the company refuses to stoop in a bid to seem more relevant. It already knows it is, Schulman explains, and it isn’t fading to any rival. This is mostly due to its two-sided system, which its CEO claims is where the true advantage lies.

The Strategic Decision Conference featured a moment where Schulman highlighted Paypal’s position in the market. Bearing the vastness of its trusted user base, the firm is far better off sticking to what it does best, says the CEO.

PayPal (PYPL)

Schulman tells the conference that PayPal oversees over 200mn regular users. This user base is most taken up by end consumers too. Only 16mn of the 200mn users of PayPal services are sellers. The remaining 184mn regular users are buyers. That is a ridiculously positive figure of the favor PayPal holds. It means the that 92 percent of the people who regularly use its services recognize trust Paypal to relay a purchase.

The competitive advantage comes from the approach the company has to the services it offers in the market. The two-sided system, according to Schulman, actually allows PayPal Holdings Inc (NASDAQ:PYPL) to control the transaction from one end to the other. This includes managing the proposition and controlling the certainty of every purchase.

Trust and simplicity

This tight grip over its platforms provides PayPal service users with comfort and control. It is what also keeps people as regular users, too. PayPal is known for the delays, yes, and it is unlike rivaling services like those of Apple Pay and Square. Such services dedicate very little towards true simplicity and that sense of a secure transaction. Instead, competitors focus on building user interfaces under guise of the user control.

In truth, Paypal’s two-sided system is simple and holistic. It also lets the company venture into new territory with ease. Schulman admits that the way things happen with PayPal simplify its global reach. End-to-end control means PayPal can move into new markets and add newer services and features without handing merchants the responsibility of writing unique code.

With 200mn regular users, PayPal is truly trusted. Mobile-friendly roll-outs like PayPal Touch took no time getting off the ground because of this. Touch saw a quick and seamless adoption. Aimed at consumers on the go, this new offering removed the need for users to enter log-in details and such every time they wish to make a purchase.

PayPal Holdings is not oblivious to where other services hold their appeal. The adoption of fast-working electronic wallet services can’t be overlooked, but in-house services like Venmo see to that front. But the online payment giant has built something simple and trusted with the two-sided system. Schulman sees it a vital customer retention tool as well. As the company rakes in more and more users over time, they will a have a hard time defecting from PayPal Holdings Inc (NASDAQ:PYPL) of business.

Fending off rivals

The company is sitting down with financial giants Mastercard and Visa, too. It seeks to further simplify the fund transfers of users. The frequency of transactions under the PayPal business stands to skyrocket as a result. This is according to market watchers like Naomi Gray. Breaking down walls will help the company stay ahead of emerging rivals.

Proof of PayPal’s market favor is its transaction volume during the first quarter of this year. The firm reported a 23 percent year-on-year rise. That pushes it to nearly $100 billion in payments in just 3 months, although it stays in line with the previous quarter.

Looking at Paypal stock, the company’s shares are go for $52.87 a pop. They fell by $0.80 during Monday’s trading, down 1.42 percent. PayPal Holdings Inc (NASDAQ:PYPL) is also buying back up to $5bn in outstanding stock. Directors at the company recently approved the action. Pushing news headlines is the introduction of direct, same-time banks deposits too. This comes as yet another push to stay ahead of its competitors.

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