PayPal Holdings SWOT and PESTLE Analysis

Strength

1. Ease of access: PayPal website and its other payment services are very user friendly. It is easy and simple to use, even for those who have very little experience in selling or buying online. PayPal is focused on the ease of use for both receivers and senders. It provides payments to merchants without ever providing your personal financial information to them. Merchants will not get the credit card information of the consumers, which decreases the chance of breaching personal information. With the help of PayPal even the smaller businesses can afford online payments which were only possible for large businesses prior. PayPal provides a per-to-peer payment channel by acting as a mediator between customers and merchants. The ease of access it grants to consumers be it seller or buyer is one of the most important quality of PayPal business model as it takes care of all the necessary steps involved in the management, sending and receiving of money, both the parties do not have to worry about underlying mechanism and can rely on PayPal’s excellent services.

2. Strong international presence: PayPal is available in more than 200 markets in the world, the PayPal platform which includes Braintree, Venmo and Xoom, enables consumers and merchants to receive money in more than 100 currencies, withdraw funds in 56 currencies and hold balances in their PayPal accounts in more than 24 currencies. PayPal operates in more than 17 local languages. It operates with more than 27 global financial networks and 15,000 local banks around the world. No other companies have this advanced system other than PayPal. Its high percentage of international consumer base keeps it ahead of the competition. Having alliances with other strong IT businesses is a major plus point for PayPal, it helps bring in new customers and make business more effective. PayPal is the only online global payment system in the world that has such widespread coverage around the globe, this is a key to success for PayPal to work hard and boosts reputation, profit and market share. PayPal has an impressive growth every year owing to its successful implementation of vision.

3. Innovation to stay secure and ahead of the competitors: Through a combination of technological innovation and strategic partnerships, PayPal creates better ways to move money and manage it on various platforms. PayPal offers choice and flexibility when sending payments, paying or getting paid, by employing the latest innovations in technology which has been It’s USP. PayPal uses anti-Phishing policies to keep user data protected. PayPal suggest its merchant side customers to employ precautions such as delaying the shipping for international, expensive and/or large orders and tracking and verifying the shipping address with the IP geo-location service from search engines. PayPal advices to keep records of names, email addresses, IP addresses and shipping addresses of customers and match any suspicious activity against your blacklist to decline or flag blacklisted transactions. Also set the limits for the number of purchases and total amount merchant accept from one account per day, week, or month.

4. Largest customer base in the segment, helping it market itself: PayPal has more than 237 million satisfied users worldwide and more websites use PayPal than any other payment gateway. Many times, it happens that a potential customer may not have heard of your business, but they certainly have seen or heard of PayPal before. PayPal logo can be easily seen by the users because it appears in almost every website that provides services as the payment method. Consumers therefore are more likely to consider purchasing from your website as they do not have to give their financial details if they use PayPal. A strong popular and recognizable brand is a vital strength of PayPal as it is recognized and respected. PayPal currently has 237 million plus active accounts with 218 million Active Consumer Accounts, 19M Active Merchant Accounts. It has presence in 200+ markets with intuitive customer interface online, In-App, In-Store.

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Weakness

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Opportunity

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Threat

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Political

1. Government’s digital initiatives and nationalism: The world is moving towards digitalization and various low-income and developing countries are becoming new market for such technologically advanced services. With increase in financial awareness in general and digitalization initiatives taken by governments of various nations, it becomes important to take into consideration political influence it has on such financial services. For example, Indian government is promoting cashless transactions through use of digital wallets to curb the black money which haunts its economy. This appears to be a great opportunity for a company like PayPal which can expand its market share by leveraging on these but at a same time government is also promoting use of domestically built apps and financial facilities like BHIM app and RuPay are direct threats to PayPal’s business in India. Additionally, rise in nationalist movement could also affect PayPal’s business if government of any nation decides to impose higher tax rates on foreign companies. In such times, even people of the nation get swayed away and may boycott foreign institutions. Thus, it is important to take into consideration such a major political factor.

2. Global political instability: Political instability can be from both the sides, host nation as well as home nation. Trade war and ‘Buy American, Hire American’ campaign of home nation of PayPal, United States of America, can put constraints on the operations of PayPal outside America. Trade war with other nations can result in sore relations with the host nations at company level and financially inefficient operations. On the other hand, instable host governments and its changing policies can adversely affect the operations of PayPal. Tax policies, Foreign Direct Investments, Nationalist movement, Rate of Interest are few things that change with the change in governments and these could affect the bottom line of PayPal. Current situation in India is merry with government promoting FDIs, attracting foreign businesses by relaxing policies and improving overall ease of doing business, but with the change in political scenario this too could change and thus companies cannot be negligent to not take steps to protect itself from such instable political scenarios around the globe.

Economic

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Social

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Technological

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Legal

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Environmental

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