📇 Does PayPal's Rising Fees Mean Better Services?
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📇 PayPal: Do Rising Fees Mean Better Service?
Online payments processor PayPal Holdings (PYPL) announced an increase in fees for some of its newer products effective from August. It’s a gamble given the number of alternatives that are also vying for the customer’s attention. (Tweet This)
Basking In All-Round Growth
The evolution of money and payment systems over time has been nothing short of fascinating. From cash to cards to now contactless and fully digital payments to anyone, anywhere in the world, at any time, the entire ecosystem has been developing at a breakneck pace.
PayPal, founded in 1998 in Palo Alto, CA was earlier spun-off from eBay in 2013 after witnessing exponential growth. In the past five years, PayPal has almost doubled its customer base. The company has long eclipsed eBay in market cap and is now inching closer to market leader Visa.
The pandemic has only accelerated PayPal's growth. No prizes for guessing, but 2020 was the strongest in PayPal's history. Not to be outdone, 2021 is turning out to be a strong year as well. This year, the company expects ~53M net new accounts. Its Q1 2021 PayPal reported revenue growth of 29% - the highest in at least four years.
Gearing Up To Charge More
Effective August 2 this year, PayPal has made the following changes to its tariff structure:
PayPal is making every effort to be front and center for the customer at the time of checkout for any online purchases. Their buy now pay later solution, "PayPal Pay in 4," announced in March this year has already resulted in a 15% jump in payment volumes for businesses.
The fact that credit and debit card peers such as Stripe and Authorize.net are successfully charging their clients, 2.9% per transaction is giving PayPal the confidence that it will be seen more favorably even with the new pricing structure. Customers are also sensitive to data and transaction security, and it seems like PayPal has a leg up given its long track record.
Better service, better protections, and convenience. With this Mantra, the increase in fees should also serve in enhancing PayPal’s revenues and earnings in the future. No wonder, the company is certainly a pal for investors and users alike.
PYPL ended at $283.38, up 1.89%.
Company Snapshot 📈
PYPL $283.38 +5.27 (1.89%)
Analyst Ratings (47 Analysts) BUY 85% HOLD 13% SELL 02%
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