☕️🏎 PayPal: A Fintech OG rejoining the Fastlane

A detailed look at PayPal's origins, early success factors, current product stack, latest releases and reasons to be bullish

Aug 29, 2024

How did PayPal originally start and what does the PalmPilot have to do with it?
What were the four main drivers of their early success (and of many fintechs)?
How much did the eBay partnership contribute?
What was Elons real role in PayPal and when did he get the x.com domain back?
What is the total market value of companies founded by the PayPal Mafia?
What does PayPal actually do in simple terms?
What do I think about its recent releases including Fastlane (its 1-click checkout product)?

These questions and more will be answered in this week's edition.

Hey Fintechers and Fintech newbies 👋🏽

I’m back!

This is a special edition that I published as part of This Week In Fintech’s ‘Signals’ series and am now posting to my loyal subscribers all about…PayPal.

If you’ve already read this edition on TWIF, jump down to the bottom, drop a like, comment and share it with a friend :-)

One of the earliest fintechs, before fintech was even a word, PayPal was the pioneer of the digital wallet and its founders were decades ahead in its predictions on digital currency.

Many think they’ve lost their way recently, losing ground to competitors and missing the mark with products.

I think it’d be a mistake to bet against them and to show why, I take a look back at their origins, give an overview of their product stack including their most recent releases with the obvious inclusion of AI, give my view on where they have huge growth opportunities and, touch on the wider impact PayPal and the PayPal mafia has had on fintech.

As well as interesting news, puns + movie references, this edition includes the following:

PayPal’s origins
- From the first P2P PalmPilot Payments product (apologies for the alliteration) to e-commerce payments, and the truth about Elons involvement
A timeline of key events from 1999-Present Day
- 1998-2002: Founding and Early Growth
- 2003-2009: Expansion and Innovation
- 2010-2014: Mobile and Digital Wallet Expansion
- 2015-2019: Spin-Off and New Ventures
- 2020-Present: Cryptocurrency, AI, and Continued Growth
The PayPay x eBay partnership
Simplistic JTBD overview of their product stack
The PayPal Mafia sphere of influence
Their latest product launches
- Checkout Enhancements
- CashPass
- Smart Receipts
- Advanced Offers
- Venmo Business Profiles
- Fastlane
Reasons to be bullish on PayPal’s product stack

Now let’s get into it 💪🏽

NOTE: You know the drill. Your mail client might crop the end of this so click here to see the full, unclipped edition,  drop a like and comment at the end, and don't forget to subscribe. As this is a repost, no Spotlight or News this week but back to the regular format next time.

PayPal Origins

PayPal's origins trace back to December 1998 and six people, Max Levchin, Peter Thiel, Luke Nosek, Yu Pan, Ken Howery, and Russel Simmons, three of whom initially launched a company called Confinity (previously named FieldLink), which started out developing security software for handheld devices like the PalmPilot.

After realising their software security idea was gaining minimal traction and was relatively niche, they pivoted to another idea Max and Peter had been working on—digital payments—specifically using email to facilitate payments online.

"We thought it would be interesting to write some encryption software for PalmPilots, and that was the initial idea. But it turned out that people wanted to exchange money." - Max Levchin

Before pivoting to the core concept of email-based digital payments, PayPal was one of the first mobile payments products that leveraged PalmPilot's infrared technology.

"The original PayPal product let people beam money to each other via PalmPilots. It didn't work very well, but even if it had, the market for Palm Pilot payments wasn't going to be huge." - Peter Thiel

A simple but crucial calculation assessing the market and network possibilities for the product at the time by board member Reid Hoffman highlighted the need for another strategic pivot. Below is an extract from Jimmy Soni's The Founders:

"We are living in the heaven of PalmPilots," observed Reid Hoffman, a Stanford friend of Thiel's and early Confinity board member, "and we could walk into every single restaurant and go to each table and ask how many people have PalmPilots." He guessed the answer was between zero and one per restaurant. "And that means your use case can only be used between zero and one times, per restaurant, per meal cycle! You're hosed! It's over on this idea."

After looking at the growth of email account openings and seeing the potential of an email-linked payment system, they pivoted a second time.

In 1999, they launched an email-based money transfer service to make 'paying your pal' and online payments easier, more convenient, and more secure.

PayPal was born, and the rest, as they say, is history.

Right Place. Right Time. Right Partners

The early PayPal product we know of today allowed individuals and businesses to send and receive money online, primarily via email and had three distinct features:

👉🏽 Email-Based Payments: PayPal's key innovation was enabling users to send money using just an email address. This simplified the process of transferring funds, especially for online transactions, which were becoming increasingly common in the late 1990s.

👉🏽 Account Setup: Users needed to create a PayPal account, which was linked to their email address. They could fund their PayPal account by linking it to their bank account, credit card, or debit card.

👉🏽 Sending Money: Once an account was set up, users could send money to anyone with an email address, even if the recipient did not have a PayPal account. The recipient would receive an email notification and be prompted to create a PayPal account to claim the money.

Building a useful product that solves key problems for a specific user base is not the silver bullet to creating a successful proposition, as many founders and product builders will know. Success is driven by several factors, in addition to a well-built product that solves crucial problems.

PayPal is no different and there was a perfect storm of factors that contributed to its success in that early period:

1. First-Mover Advantage in a Growing Market

Timing is everything when it comes to launching a product and growing a customer base.

💡 The classic example I love to use is the Sega Dreamcast. It was the first console to launch with online gaming functionality through SegaNet in 2000, but it launched at a time when the PlayStation 2 started to dominate, and online gaming infrastructure wasn't quite ready.

PayPal launched in the late 1990s during a rapid expansion of e-commerce, with platforms like eBay becoming major players in online retail. There was a growing need for a simple, reliable way to make payments online, and PayPal filled this gap effectively, riding the e-commerce boom and timing its launch perfectly.

They'd also noticed that email growth was outpacing PalmPilot's growth, and they were the first to pivot strategically to an email-based payment system, riding the email growth wave.

2. Aggressive User Acquisition Strategies

PayPal offered cash bonuses for new users and referrals, which spurred rapid adoption. This "viral marketing" approach was highly effective in the early days, driving user growth and contributing to user network effects that made PayPal more attractive to new users as it was seen as a more popular product.

PayPal site with referral offer circa 2000. Source: WebDesignMuseum

They also knew when to close the tap and reduce the flow of what can sometimes be costly referral programs changing from "Get $5 for signing up plus $5 for each friend you refer" to "Get $5 for signing up!" in 2002.

3. Strategic Leadership and early merger

The leadership team, including Max Levchin, Peter Thiel, and later Elon Musk (after the X.com merger), provided strong strategic direction. They were quick to pivot, take risks, and make bold decisions that positioned PayPal for growth. This also included key members of the board such as Reid Hoffman whose importance is highlighted by the earlier quote from him.

The merger in 2000 with X.com, led by Elon Musk, allowed PayPal to consolidate resources and expand its reach. The eventual decision to rebrand entirely as PayPal, focusing on the payments aspect, was crucial to its success.

It is worth noting that Elon's role as part of PayPal is sometimes over-exaggerated. He took on the role of CEO of PayPal after the Confinity/X.com merger, but PayPal was already a product with reasonable traction with eBay prior to his arrival, and he lasted only a short time as CEO before butting heads with employees and the board. He undoubtedly provided crucial expertise as part of their growth but not the core figure in the ideation of PayPal that some think of.

💡 Fun Fact: During the merger, and eventual acquisition of PayPal by eBay, the X.com domain, originally owned by Elon was transferred to PayPal and the subsequent spun off entity. It was only in 2017 that Elon was given the opportunity to buy back the domain, which he did and tweets have never been the same…

These three were all crucial to PayPal's early success, but by far the most significant factor in the early growth of PayPal was its integration with eBay.

4. Viral Growth through strategic eBay Integration

PayPal quickly became popular among eBay sellers and buyers because it simplified transactions. As more eBay users adopted PayPal, it created a network effect, driving further adoption. PayPal's integration with eBay, an already established digital organisation, gave it a significant boost in visibility, user base, and most importantly, brand trust.

It also focused on acquiring high-volume eBay sellers, who then insisted their buyers use PayPal, which further accelerated its growth leveraging the network effect.

Total Payment Volume (PayPal total and eBay’s portion)

Strategic partnerships are a common theme for successful fintech products of today and PayPal was one of the first to use a strategic partnership to drive growth.

In addition, PayPal understood e-commerce trends and challenges, built a secure customer centric payments platform that removed the need of repeated card & account entry, and used its expertise to be the first to solve a number of key problems for customers, including making it easier to transact across borders.

The product and the company didn't stop there of course and the strategic partnership with eBay was just the beginning. PayPal has a long and winding road in terms of company and product evolution from FieldLink/Confinity in 1998 all the way to today, including not one, but two IPOs, being acquired and themselves making multiple acquisitions to broaden their product stack.

NOTE: This timeline is longer than the one I did on Stripe a while back because there are 13 more years of product and company evolution to cover.

Timeline of key events

1998-2002: Founding and Early Growth

1998: Confinity is founded by Max Levchin, Peter Thiel, and Luke Nosek. Initially focused on security software for handheld devices.
1999: Confinity shifts focus to developing a digital wallet and launches its first product, enabling users to send money via email. This service later becomes the foundation of PayPal.
2000: PayPal's integration with eBay begins informally, as eBay users start adopting PayPal as a payment method due to its convenience and security features. Confinity merges with X.com, an online banking company founded by Elon Musk. The combined company focuses on digital payments and away from digital banking.
2001: The merged company rebrands as PayPal and focuses entirely on the online payment system. PayPal surpasses 1 million user accounts largely driven by the eBay integration and becomes the preferred payment method for eBay transactions.
February 2002: PayPal goes public with an IPO, raising $61 million.
July 2002: eBay acquires PayPal for $1.5 billion in stock. PayPal is formally integrated as the primary payment service on eBay, replacing Billpoint, eBay's in-house payment system.

2003-2009: Expansion and Innovation

2003: PayPal launches its services in Europe and expands its global reach, becoming available in 38 countries. It surpasses 20 million user accounts as its international expansion fuels growth.
2004: PayPal introduces its developer API, allowing third-party developers to integrate PayPal into their websites and applications.
2005: Launch of PayPal Mobile, enabling users to send payments via text messages.
2007: PayPal launches PayPal Security Key, offering two-factor authentication to enhance account security.
2008: Introduction of PayPal Pay Later, a service that allows eBay customers to buy items and pay for them later. It also acquires Fraud Sciences, an Israeli startup specialising in online risk tools, to bolster its fraud detection capabilities.
2009: PayPal acquires Bill Me Later, a credit product that offers financing options for online purchases, later rebranded as PayPal Credit. PayPal surpasses 150 million user accounts, solidifying its position as a global leader in online payments.

2010-2014: Mobile and Digital Wallet Expansion

2010: PayPal introduces PayPal X, an open API platform, further expanding its integration capabilities for developers and businesses.
2011: Launch of PayPal Here, a mobile point-of-sale (mPOS) system allowing small businesses to accept card payments via smartphones. PayPal surpasses 100 million active user accounts.
2012: PayPal launches PayPal Access, a service that allows users to log in to e-commerce sites using their PayPal credentials.
2013: PayPal acquires Braintree for $800 million, gaining the popular mobile payment service Venmo. Launch of PayPal Beacon, a device that enables hands-free payments using Bluetooth technology.
2014: PayPal expands its mobile payment capabilities by launching One Touch, a service that allows users to make purchases across apps and websites with a single touch. PayPal surpasses 150 million active user accounts.

2015-2019: Spin-Off and New Ventures

2015: PayPal spins off from eBay to become an independent publicly traded company, listed on the NASDAQ under the ticker symbol PYPL. PayPal acquires Xoom, a digital money transfer service, expanding its remittance capabilities.
2016: Launch of PayPal Commerce, a suite of tools that enables merchants to integrate PayPal into their online stores, including social media channels.
2017: PayPal partners with Visa and Mastercard to allow customers to use their PayPal accounts in physical stores.
2018: Acquisition of iZettle for $2.2 billion, strengthening PayPal's presence in the European and Latin American markets with its mobile point-of-sale technology. PayPal acquires Hyperwallet, a global payout platform, enhancing its cross-border payment services. PayPal launches PayPal for Partners, a platform enabling marketplaces, crowdfunding platforms, and e-commerce providers to integrate PayPal services seamlessly.
2019: PayPal launches PayPal Honey, a shopping tool that finds and applies coupon codes automatically, following its acquisition of Honey Science Corporation. PayPal surpasses 300 million active user accounts, driven by its continued global expansion and new product offerings.

2020-Present: Cryptocurrency, AI, and Continued Growth

2020: PayPal launches a new service allowing users to buy, hold, and sell cryptocurrencies like Bitcoin, Ethereum, and Litecoin directly within their PayPal accounts.
2020: Introduction of PayPal Business Debit Mastercard in Europe, offering businesses a debit card linked to their PayPal balance.
2021: PayPal launches its Buy Now, Pay Later service, allowing users to split purchases into interest-free instalments. PayPal surpasses 400 million active user accounts, reflecting its growing role in the digital economy.
2022: PayPal introduces the PayPal Generosity Network, a crowdfunding platform allowing users to raise money for personal causes.
2023: PayPal expands its cryptocurrency offerings, launching Cryptocurrencies Hub, a feature allowing users to convert cryptocurrencies into fiat currencies and spend them with merchants.
2023: Introduction of PayPal Savings, a high-yield savings account integrated into the PayPal app, in partnership with Synchrony Bank.

2024: Present Day

A glance at the timeline shows the evolution they've gone through.

It began with the core product of email-driven P2P payments tethered to eBay transactions, and its scope expanded to broader e-commerce payments, including credit products, mobile payments, and a more secure checkout experience.

The acquisition of Braintree in 2013 and the prior launch of PayPal Here (now discontinued and fully replaced by Zettle) signalled a move into the merchant acquiring and payment processing arena in addition to their core consumer e-commerce payments vertical.

Since their second IPO and return to independent company status, decoupling from eBay, they've further broadened their product stack, allowing crypto payments, launching a good cause crowdfunding platform, introducing savings, and much more.

From that core job of "making e-commerce payments simpler and easier for consumers" to "simplifying payment processing for merchants" and beyond.

For me, the breadth of their product stack is simultaneously one of their strengths and challenges. Their recent set of product launches seem like an acknowledgement of a need to refocus on their core value proposition. To further highlight that focus, I'll first give an overview of the current breadth of problems they solve for consumers and businesses.

Overview of their product stack

Their website, which shows their products and services by the two key target users, provides a reasonable gauge of their product breadth.

However, I prefer to do a Jobs-to-be-Done style overview in which their products and services are organised into 'Jobs' that consumers and businesses look to outsource to third parties such as PayPal.

💡Read more about the JTBD framework in this previous edition and see it applied to Stripe here.

It also makes answering the question, "What does PayPal do?" a lot simpler.

Make and Take Payments Online and In-person: Consumers want a secure and easy way to make payments online without exposing their credit card or bank account details. Businesses need a reliable, secure, and easy-to-integrate payment processing solution for online & in-person sales.

The original core of their offering, which started with email-linked digital wallet payments, broadened with Braintree, triggering the biggest change in direction. Paypal now has a suite of options for making payments through the PayPal app and for businesses to take payments using Braintree, Zettle

Manage Risk, Fraud and Finances: Businesses need to protect themselves from fraud and ensure secure transactions and also have tools to support them in their day-to-day operations including payouts and bookkeeping.

Some of these protections are baked in, but PayPal also offers business and enterprise tools as part of its PayPal and Braintree platforms. Their reporting tools and Hyperwallet allow businesses to manage mass payouts and view business performance.

An area of their stack where there is a lot more growth to come.

Increase Conversion with Finance Options: Businesses want to increase sales by offering customers flexible payment options that enable them to buy now and pay later. Consumers require flexible payment options that allow them to buy now and pay later, especially for large purchases.

👉🏽 Pay in 3 | PayPal Credit | Paidy

Personalise E-commerce experience: Both consumers and businesses want to enhance the online shopping experience through personalised recommendations, discounts, and targeted marketing.

This is another area where PayPal has a lot of scope to grow. Personalisation through discounts, recommendations, and rewards can lead to greater retention, repeat sales, an increase in basket size, and overall conversation. At present, Honey, the discounts and coupons platform acquired in 2019 that finds and applies discounts to baskets, is the only true consumer-focused product in this JTBD.

Send Money to Friends and Family: Consumers need a fast, easy, and low-cost way to send money to friends and family domestically and internationally.

Venmo is the stand-out product here and is projected to reach 100m users by 2026

There’s also Xoom, which gives customers the ability to send cash to anyone in any country by creating Western Union style cash pickup requests via the Xoom app.

👉🏽 Venmo | PayPal P2P | Xoom

Access Capital and Financial Services: Small businesses need access to capital to grow, as well as financial services that help manage cash flow.

👉🏽 Working Capital | Business Debit Card

As you can see from these jobs, they are much broader than just "Allow customers to make payments on the internet easier."

The PayPal mafia and their lasting impact on Fintech

Before taking a look at their latest product launches and my view on why they are interesting, I want to say a few words on the PayPal mafia.

The PayPal Mafia is the term used to describe the group of former PayPal executives and employees who have become some of the most influential figures in the tech industry. This group includes notable names like Peter Thiel, Reid Hoffman, Max Levchin, David Sacks, Elon Musk and many others. Collectively, they have founded or played key roles in companies such as Tesla, SpaceX, LinkedIn (Co-founded by Hoffman), YouTube, Yelp, Palantir (Founded by Thiel), and many prominent fintechs such as Affirm (Founded by Levchin), Square, and Stripe.

Their impact on the tech world is staggering. They have created or led companies with a combined market value exceeding $1 trillion. The innovations and platforms they've built have fundamentally transformed industries, particularly in fintech, social networking, and e-commerce.

Peter Thiel, through direct investments and via his Founders Fund & Valar Ventures vehicles, has also provided significant early backing for many of the fintechs we know and love today.

This includes:

Stripe
Adyen
Qonto
Remitly
SoFi
Wise
FundingCircle
N26 and many others

There is a sliding doors moment circa 2000, when eBay's in-house payments platform Billpoint gains popularity among customers, eBay decides to fully commit to it and therefore PayPal's growth driven by eBay customers fails to materialise. Peter Thiel and Max Levchin then don't set up Founders Fund etc, and the fintech landscape of today which includes Stripe, Affirm, Wise and Adyen, looks very different.

That's why, regardless of any bumps in the road, their impact on the broader fintech landscape has to be remembered and respected.

Latest Product Launches

As you can see from the jobs outlined, PayPal has broadened its offering by trying to solve more problems for consumers and businesses, providing access to capital for businesses and credit to consumers, and offering businesses a suite of tools to better manage the process of taking and managing payments.

Much more than "Allow consumers and businesses to take and make payments".

But as hinted at earlier, their latest wave of changes is a refocus on that core job. They look to improve the checkout and overall e-commerce experience with the unsurprising mention of AI across a number of these new products and features.

Checkout Enhancements

Speed and efficiency of the checkout experience massively impacts conversion. The longer the end-to-end checkout experience, the lower the conversion vs faster and shorter journeys. As part of these enhancements, PayPal is upgrading its checkout experience using AI (there it is) to improve checkout times, reduce lagging response times, and, where possible, remove password prompts by using device passkeys on both iOS and Android.

🧠 My Thoughts: Not the most glamorous change but improving checkout journey times improves key topline metrics in one of their biggest product lines and should logically lead to greater basket amounts.

CashPass

Now we get into the more exciting changes.

CashPass is a major upgrade to the PayPal app that gives customers AI-powered cashback offers from hundreds of merchants, including early launch partners Best Buy, eBay, McDonald's, Priceline, Ticketmaster, Uber, and Walmart.

Gone are the days when you cut the coupons out of the newspaper and have a slight bit of shame at checkout as the cashier scans the coupons one by one, leading to raised eyebrows from fellow shoppers in the long queue behind.

Yes, I am aware those days have been gone for a while but PayPal are bringing fully digitised, personalised, and most importantly, seamless merchant cashback into reality.

Open up the PayPay app, tap on the offer, shop at that business, and check out with PayPal.

Users can also double stack cash back rewards with the rewards received as part of the PayPal Cashback Mastercard and then sweep that reward cash directly into a PayPal Savings account powered by Synchrony Bank to earn interest on rewards.

🧠 My Thoughts: This type of embedded cash back offer is the future of loyalty. It benefits consumers, merchants, and PayPal, and it is what I sometimes call a triple-threat feature for obvious reasons. Consumers get the obvious immediate cash rewards. Merchants get repeat sales that target loyal customers (and often encourage loyalty in new customers). PayPal gets increased DAU/MAU (daily/monthly active usage), increased wallet funding amounts and frequency, potentially more customers for its Cashback Mastercard, and more customers for their savings account.

Smart Receipts & Advanced Offers

These were presented separately but it makes sense to introduce them as a pair.

Smart Receipts, available at participating merchants, are digital receipts that allow customers to track their purchases and see personalised, relevant offers and recommendations in the receipt itself. It leverages the fact that nearly 45% of PayPal customers globally open their email receipts everyday, an incredible open rate, and therefore one of the best places to surface relevant offers from the merchant.

The offers from the merchants will be powered by another new product in the stack, the Advanced Offers Platform. The platform will give merchants insights into what consumers have bought across the internet, using AI to organise and analyse the data. This will let them customise offers to better attract customers and surface hyper-relevant and personalised offers in the Smart Recipient as specific as suggesting the exact product, size and colour. Merchants using the platform only pay for it if the offers actually perform and customers take them up. It also gives customers the option to opt in or out of sharing their data with the merchant (similar to the Visa Data Token launched earlier this year).

"Reach customers based on what they've actually bought across the internet… down to the SKU. Only PayPal has the data to do this." Alex Chriss, PayPal CEO

🧠 My Thoughts: Most customers welcome more personalisation and tailored offers tailored to the actual individual, not just, "here's what other people who bought this item bought". This Smart Receipt and Advanced Offers platform combo not only enables this for merchants of all sizes already using PayPal but uses insights from 426 Million PayPal accounts and Smart Receipts to surface relevant offers to customers through a mechanism that has a high engagement rate. Innovation that again, feels like a throwback to that core principle of improving the e-commerce experience for customers and merchants.

Upgraded Venmo Business Profiles

In 2021, Venmo introduced Business Profiles as a simple way for businesses to accept payments and grow their business. It's now upgrading its business profiles. The changes will help small businesses improve their discovery by adding subscribe options, profile rankings, and the ability to offer promotions in their profiles. This could help consumers find local small businesses endorsed by their networks and enjoy cash back deals when supporting local businesses.

🧠 My Thoughts: The social network element of Venmo makes it a really interesting tool for both consumers and businesses. Giving businesses the ability to boost visibility and generate that social proof by seeing other Venmo friends and users that use that business, whether it's a local coffee shop or restaurant, will hopefully lead to more traffic for that business and possibly payment directly through the Venmo app. I know a couple of folks working on a Lifestyle + Payments product but Venmo is well placed to execute on this. Lot's more potential here.

Fastlane

Last but certainly not least, the highly publicised, Fastlane.

PayPal's Fastlane is a new one-click guest checkout experience that PayPal merchants will be able to offer their customers, making the checkout experience faster and painless. First-time users save card, address and shipping information, allowing customers to complete subsequent purchases with a single click anywhere Fastlane is available. No username or password to remember, no personal information to update, and no need to share a credit card with businesses all over the web.

The associated metrics are impressive. PayPal claims an >80% conversion rate for customers using Fastlane and a 32% reduction in overall checkout time compared to traditional guest checkouts in their pilot with BigCommerce.

Availability of Fastlane at checkouts will be boosted by PayPayl's recently announced partnership with Adyen. The extended partnership will help accelerate guest checkout flows for its enterprise and marketplace customers in the U.S. with plans in place to extend this offering globally in the future.

🧠 My Thoughts: The objective of Fastlane is logical. Accelerate guest checkout to businesses of all sizes helping them to drive more sales. So the increased conversion rate and reduced journey time as part of the BigCommerce pilot are positive indicators. However, even though this seems like the flagship release and will likely make a big impact on consumers, I think this is one of the least innovative of this year's big releases as it follows the already established one-click checkout products from Bolt, Link by Stripe, and Shop Pay. I'm more interested in what they do with Fastlane next and if/how they will use it to convert casual shoppers who are non-PayPal customers into fully paid-up members of the PayPal community and supercharge new customer acquisition.

Untapped Opportunities

Over the past decade PayPal has consistently expanded its offerings to address a wide array of problems for both consumers and businesses. From providing access to capital for businesses and extending credit to consumers, to equipping businesses with tools for managing payments, PayPal has gone beyond its original mission of simplifying e-commerce payments. Their suite of solutions now spans across various financial needs, aiming to simplify and improve the overall commerce experience.

However, the latest wave of PayPal's innovations signals a strategic refocus on their core mission: optimising the checkout process and enhancing the e-commerce experience. By leveraging AI and incorporating personalisation, PayPal is streamlining these processes, reducing friction, and ultimately boosting conversion rates for merchants.

That's why I'm bullish on PayPal, particularly its product growth.

Because this back-to-its-roots approach, with a modern twist, reflects PayPal's ongoing commitment to solving the most critical pain points in the online shopping journey—ensuring that the experience is as fast, seamless, secure, and personalised as possible.

I'm also bullish because there's still lots of opportunity in the e-commerce space that PayPal now has the reach, brand permission, and data to capitalise on.

Creating an advertising network is one such opportunity that PayPal has already set in motion with the strategic hiring of Mark Grethner who led Uber's new advertising business, currently on track to reach $1bn in revenue. Mark will lead the development of an ad sales business around the purchase and spending behaviour data of millions of consumers who use its PayPal and Venmo services. This will build on and take learnings from the new Advance Offers platform which currently allows existing merchants to use data and create ads that they only pay for if offers are taken up. The new PayPal Ads network will allow companies not currently part of the PayPal ecosystem to leverage the network's insights and create targeted ads.

NOTE: Mark built an ad business for Uber using data from around 150 million customers. PayPal has 3x as many and a much larger data set.

Another area where I see a lot of potential is Venmo. The latest business profile enhancements and ability to surface targeted promotions to customers seems to signal an intent to make Venmo a richer solution that is not only a payments app but also a way to help small and solo businesses grow. I'm hopeful they'll continue to do more here.

I'd like to see Venmo expand into the UK and Europe.

With Apple's NFC rules changing in a host of countries including the UK and QR codes seemingly already having their day in the sun in 2020/2021 when contact was restricted, now could be the perfect time to launch in the UK with a P2P product that uses Open Banking to perform a quick wallet funding and allows customers to tap phones to pay each other. It'll also allow sole traders and businesses to take payments directly via an enabled device and a Venmo account, circumventing sometimes costly POS hardware and transaction fees for small-margin businesses.

PayPal has been an OG in many respects.

👉🏽 First to create a full blown mobile payments product (PayPal on PalmPilot)

👉🏽 First fintech to create a strategic a strategic e-commerce partnership to drive growth

👉🏽 One of the first fintechs to IPO

👉🏽 First fintech to IPO TWICE!

👉🏽 Ahead of the mark on deferred payments launching PayPal Pay Later for eBay transactions.

Being first isn't the only factor in its success.

In fact, as you read in its origins, pivoting at the right time and making bold decisions has also proven crucial to its success.

In its 25 year span (yes, this year is its silver jubilee), its mission has shifted from “simplifying e-commerce payments for consumers” to “revolutionising commerce globally” and the journey has not always been straightforward.

With the recent product launches and partnership announcements, however, they are returning to what made them successful in the first place, refining their core product while also being dynamic and ambitious with new ventures.

That's why I'm optimistic about its medium and long-term future.

These changes directly contribute to its mission and I predict they’ll lead to improved performance across a range of its products–improving conversion rate, recurring spend by customers at merchants, faster checkout times, sticker customer rewards, and higher customer retention, greater low-cost customer acquisition–which will inevitably lead to the improved financial performance that PayPal shareholders and admirers are looking for.

That's it from me. Hope you enjoyed this deep dive and remember to drop a quick like and comment below (especially if you learnt something new about its origins) 👋🏽

P.S. I’ll be back in three weeks due to a busy work + travel schedule, and then back to regular scheduled programming :-)

In the meantime, you can check out these previous popular reads👇🏽