Undoubtedly, PayPal is one of the world’s most successful online payment systems. Serving as an alternative of traditional payment methods like cheques and credit/debit cards, PayPal is reliable, customer-friendly, simplistic – and that is why so many people prefer PayPal over other online payment solutions.
Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?
The online payment system allows customers to complete online money transfers quickly, using only their PayPal accounts. On top of all, PayPal does has comparatively low fees, which makes it all the more appealing.
Alluvial Fund performance update for the month ended May 2021. Q1 2021 hedge fund letters, conferences and more Dear Partners and Colleagues, Alluvial Fund, LP returned 5.4% in May, compared to 0.2% for the Russell 2000 and 1.0% for the MSCI World Small+MicroCap . . . SORRY! This content is exclusively for paying members. SIGN UP Read More
The company was founded in the late 1990s and in less than twenty years it managed to outperform increasing competition, becoming one of the most reliable online payment systems in existence. According to analysts, PayPal owes its unprecedented success largely to all PayPal casino sites and their unique business strategy. For years now, PayPal has been acquiring smaller businesses, mainly online money transfer solutions, thus expanding its global influence yet again. Below, we will focus on the most famous companies acquired by PayPal. But first, let us examine PayPal’s history.
History of PayPal
In 1998, Peter Thiel, Max Levchin, Ken Howery, and Luke Nosek established Confinity – a security software development company for portable devices. A year later, in 1999, John Malloy from BlueRun Ventures funded the development of PayPal, which was established as a money transfer service at Confinity.
Elon Musk's online banking company X.com united with Confinity in 2000 and later that year, X.com ended all online banking transactions in favour of PayPal. Consequently, in 2001 X.com changed its name to PayPal. PayPal grew substantially throughout 2001. The following year, PayPal introduced its business on the stock market – the company’s IPO ticker was PYPL and entrepreneurs could get a share of the company for $13.
In 2002, shortly after the IPO of PayPal, eBay acquired the online payments company for $1.5 billion. As soon as this happened, the company’s valuation per share increased 77% above the initial IPO price. Consequently, one in four eBay purchases was completed via PayPal and the company quickly became a preferred payment method for eBay customers.
Throughout the next few years PayPal kept expanding, steadily increasing its worldwide influence. In 2007, the company publicised a MasterCard partnership, which led to the subsequent release of the PayPal Secure Card service. By the beginning of 2008, PayPal’s revenues reached $1.8 billion and by 2010 the company offered services to more than 100 million active users in 25 different currencies.
A Separate Business Again
In 2014, eBay announced intentions to separate with PayPal and the spin-off was completed in 2015. Nevertheless, PayPal is to remain the payment method featured ahead of credit and debit cards on the eBay site until 2020, when the eBay-PayPal agreement ends, stated eBay in the beginning of 2018.
In PayPal’s place, eBay will take Adyen – an Amsterdam-based payment method company offering more than 200 payment methods worldwide.
Statistics show that PayPal weathered losses when eBay made their announcement in January 2018 – the company’s stock price dropped by 12 per cent. However, the online payment giant continued its business model of acquiring smaller businesses and quickly increased its stock price again. Following are some of the more prominent businesses acquired by PayPal over the years.
PayPal acquired the Chicago-based online payment business for e-commerce companies in 2013, back when PayPal was still part of eBay. The deal cost PayPal $800 million. Shortly after the acquisition, Braintree announced it would expand to Canada, Australia, and Europe. Not long after, Braintree reached the markets of Hong Kong, Malaysia and Singapore.
Braintree was founded by Bryan Johnson in 2007. In 2011, the company changed its CEO and Bill Ready took over. Shortly after, Braintree acquired Venmo for $26.2 million.
The online payments company creates a payments gateway which generates and automates online purchases. Among the major clients of Braintree are names like Uber Technologies Inc. and Airbnb Inc.
As we mentioned above, Venmo was already part of Braintree when the company was acquired by PayPal in 2013.
Venmo was established in 2009 as a mobile payment solution, specialising in P2P payments. The payment method app is commonly used by restaurant customers, who utilise it to split the tab between different diners. Venmo handled $12 billion in transactions in Q1 of 2018.
Venmo is considered a miniature part of PayPal’s mobile payment volume. Nonetheless, the company is regarded as the fastest-growing online payment solution.
Founded in 2010, Paydiant is another mobile payments solution acquired by PayPal. Paydiant is an e-Wallet platform which offers mobile payments, offers, ATM cash access, and many more. Some of the most famous brands operating with Paydiant are Subway, Best Buy, etc.
The e-commerce company was acquired by PayPal in 2015 for $280 million. According to specialists, PayPal conducted the acquisition in order to develop e-Wallet applications.
Playdiant has been successful ever since the company was established. Nevertheless, becoming a part of PayPal’s mobile payments volume has certainly influenced the company expansion in a positive way.
The same year PayPal acquired Playdiant, the online payments giant also acquired Xoom Corporation. The business is yet another online money transfer solution, highly praised for its superb safety and reliability.
PayPal paid $890 million to acquire Xoom Corporation, which the online money transfer company used in order to expand its worldwide influence, targeting new markets in India and China. Currently, Xoom Corporation operates in more than 70 different countries.
Modest was founded in Chicago in 2012. The company focuses on improving customer experience and allows online retailers to drag and drop purchase buttons so that customers can see and buy products without leaving the current page.
PayPal acquired Modest, aiming to expand into a branch of the e-commerce business termed contextual commerce. Modest worked together with Braintree to make sure that online retailers have all things necessary to embed buy buttons where they wanted.
Swift Financial, an online loan company, was founded in 2006. PayPal acquired the company in 2017 for $183 million. According to data, at the time of the acquisition, Swift Financial had supported more than 20,000 small businesses.
PayPal’s biggest acquisition up to date is that with the Swedish fintech company iZettle. The online payments giant paid $2.2 billion in order to acquire the European company. The deal was completed in May 2018.
What stimulated PayPal’s interest in the European financial technology company was a statement made by iZettle representatives. In it, company representatives commented they were planning to introduce their business on the stock market. After PayPal announced its intention to acquire the company, however, iZettle terminated the IPO process.
As mentioned above, iZette is a financial technology company which allows its clients to conduct payments via their mobiles. The online payments solution operates in Latin America and Europe.
Hyperwallet is a company for financial technology which was founded in 2000. The company provides clients with online payout platforms for financial institutions as well as market businesses. The enterprise supports a wide variety of currencies and offers many payment options, such as prepaid cards, cash pickups, etc.
In June 2018, PayPal acquired Hyperwallet for $400 million in order to extend its online payment solutions to e-commerce platforms all over the globe.