When eBay decided to spin-off PayPal into its own separate entity in 2014, many industry observers believed the move would give the digital payments company the ability to become more nimble in the market and achieve true powerhouse status alongside the traditional card networks and payments processors.
To help spur that growth, PayPal hired Daniel Schulman as president and CEO to help prepare it for the eventual split from eBay in July 2015.
Schulman came over from American Express, where he helped set the card network down a path toward digital payments. And he's done the same now for PayPal as the company continues to not only enhance its consumer-facing offerings but also help merchants become better suited to handle customers' changing expectations when it comes to the in-store and online shopping experience.
PayPal's busy 2017 is the reason why Mobile Payments Today selected the company as the top influencer in the industry for the past 12 months. We came to this decision based on the moves payments companies made in 2017 that made an impact on the industry. Mobile Payments Today decided that PayPal indeed was that company.
Wheeling and dealing
One thing that has defined PayPal since the eBay split is the number of acquisitions and partnerships the company has announced over the past couple of years that are meant to benefit both consumers and merchants.
PayPal's most significant acquisition happened in 2013, before the split when it bought Braintree, which just happened to purchase Venmo a year earlier. Venmo is now the preferred mobile person-to-person app for a large portion of millennial consumers.
But the major acquisitions have continued since the eBay split.
PayPal acquired digital remittance provider Xoom in 2015, just after the spinoff and continued this year with the acquisitions of Swift Financial and Tio Networks. It hit a bit of a snag with the Tio purchase when it suspended the network's operations in early December after discovering a data breach that affected some 1.6 million users.
As for the partnerships, there have been plenty of those in the past year alone.
Visa and PayPal in July extended their strategic partnership to Europe to accelerate the adoption of secure and convenient online, in-app and in-store payments. The two companies already were doing this in the U.S. and Asia-Pacific region.
Additionally, PayPal — under its banking license in Europe — joined the Visa network of client financial institutions to offer Visa accounts in Europe, enabling consumers and businesses to use their PayPal funds to spend wherever Visa is accepted worldwide.
PayPal also extended its existing partnership with MasterCard to the Asia-Pacific region.
The deal expanded PayPal's presence at the point of sale and enabled Masterpass for Braintree merchants in the region. Both companies also planned to collaborate to create opportunities to leverage MasterCard's new payment flow technologies, providing "increased value to MasterCard cardholders, financial institutions and PayPal customers."
On the mobile wallet front, PayPal also announced a partnership with one of the other major Pays in the market.
Samsung and PayPal in July announced an expanded strategic partnership that saw PayPal become a payment method Samsung Pay wherever Samsung Pay is accepted, whether in-app, online and in-store.
That partnership also extended to Braintree as affiliated merchants can accept Samsung Pay as a method of payment in-app and online.
PayPal also secured a partnership in China with Baidu. That agreement called for the Baidu mobile wallet to be accepted by some 17 million PayPal merchants worldwide.
PayPal also made headway with expanded bank partnerships in 2017.
PayPal in July expanded its relationship with Chase to "enable PayPal to further expand its reach in-store, enable Chase-issued cards to be easily added to newly created or existing PayPal accounts and will allow joint customers to use their Chase Ultimate Rewards Points anywhere PayPal is accepted online and in-app," Schulman wrote in a blog post.
Chase Pay also became an option to transfer funds to the PayPal Wallet. Braintree, PayPal's processing arm, will add Chase Pay as a payment method for its merchants.
PayPal also announced a relationship with Citi to enable ThankYou Rewards cardholders to redeem their points at merchants that accept PayPal online and in app. The companies expect this capability to go live in 2018 for U.S. cardholders. PayPal and Citi said they will explore extending this capability to cardholders outside the U.S.
It's a safe bet such partnerships will continue in 2018 for PayPal.
"PayPal is unique in that it's the only payment platform that operates at scale globally, across both the consumer and merchant side of the ecosystem," Arnold Goldberg, PayPal's vice president of merchant product and technology, told Mobile Payments Today via an email. “Because of this unique value we can bring, and because of our agnostic approach and ability to work across devices and platforms, we're able to partner across the fintech ecosystem with banks, technology companies and the card networks."
PayPal most recent quarterly earnings show the company is only going forward.
It added 8.2 million net new active accounts (Venmo included) in the third quarter, which was a record for PayPal in any one quarter.
Some 70 million consumer accounts opted into PayPal's One Touch checkout service, while about 6 million merchants accept One Touch.
Of the $114 billion in total payment volume for the quarter, some 35 percent of it comes from $40 billion in mobile transactions.
P2P volume also continues to grow, particularly Venmo. Some 21 percent of PayPal's total payment volume in the third quarter came from PayPal itself, Venmo and Xoom.
Venmo volume rose 93 percent in the quarter to $9.4 billion.
As far as what 2018 will hold for the company, it's clear at this point the partnerships will continue as PayPal becomes one of the most versatile mobile wallet platforms worldwide.
The company is even helping its users stash money away from retirement thanks to a partnership with Acorns, a micro-investing app. Early this year, all U.S. PayPal customers will be able to set up and use Acorns within PayPal.
When consumers log into their PayPal account, they'll be able to link their Acorns account right from the PayPal home screen. Once the accounts are linked, consumers can transfer funds, monitor their investments, make withdrawals and manage their account from the PayPal website and mobile apps.
The Acorns partnership is yet another example of how PayPal views the market.
"PayPal's mission is to democratize access to financial services, and we've been making great progress here," Goldberg said. "Over the last few years, we've taken a close look at how our consumers engage with us on mobile and have redesigned our mobile app to give them a simple and more personal way to move and manage their money no matter where they are."
Will Hernandez Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.