PayPal is an American multinational fintech company that offers a multitude of money transfer and associated services around the world. The company, which began life as Confinity in 1998, has enjoyed a first-mover advantage in the peer-to-peer payment industry for many years. Today, the company is consistently profitable and many assume that it will continue to grow and maintain market dominance as eCommerce and consumer finance evolves.
A payment processing platform that provides tools for businesses to accept online payments, manage subscriptions, and handle various financial transactions. Stripe competes with PayPal in the online payment processing market.
Stripe offers payment processing solutions for online businesses, including support for credit card payments, subscription billing, and developer-friendly APIs.
Both offer online payment processing, but Stripe is known for its developer-friendly tools and customization options.
Stripe’s focus on developer-centric features and flexibility.
Square
A financial services and mobile payment company that offers a range of payment processing solutions, including point-of-sale (POS) systems and online payment tools. Square competes with PayPal in the payment processing and mobile payments market.
Square provides payment processing services for businesses, including online payment acceptance, POS systems, and invoicing tools.
Both offer payment processing solutions, but Square focuses on in-person payments with its POS hardware and mobile payment options.
Square’s emphasis on in-person payments and POS systems.
Amazon Pay
A payment processing service offered by Amazon, allowing customers to use their Amazon accounts to make online purchases on third-party websites. Amazon Pay competes with PayPal in the online payment and e-commerce market.
Amazon Pay enables online shoppers to use their Amazon credentials to complete transactions on partner websites, providing a streamlined checkout experience.
Both offer online payment solutions, but Amazon Pay leverages Amazon’s extensive user base and emphasizes a familiar checkout experience.
Amazon Pay’s integration with Amazon accounts and brand recognition.
Authorize.Net
A payment gateway and merchant services provider that facilitates online payments and secure transaction processing for businesses. Authorize.Net competes with PayPal in the online payment processing market.
Authorize.Net offers payment gateway services to enable online businesses to accept credit card payments, subscriptions, and e-checks securely.
Both provide online payment processing, but Authorize.Net specializes in payment gateway services and integrates with various merchant accounts.
Authorize.Net’s focus on payment gateways and merchant services.
Adyen
A global payment company that offers payment processing solutions, including online, in-app, and point-of-sale payments. Adyen competes with PayPal in the global online payment processing market.
Adyen provides payment processing services for online and in-store transactions, with a focus on global reach and unified commerce solutions.
Both offer online payment processing, but Adyen is known for its global payment capabilities and support for multiple payment methods.
Adyen’s global reach and unified commerce solutions.
Google Pay
A digital wallet platform developed by Google, enabling users to make payments and store payment methods for online and in-store transactions. Google Pay competes with PayPal in the digital wallet and online payment market.
Google Pay allows users to store payment methods, make online and in-store payments, and send money to contacts through the Google ecosystem.
Both offer digital wallet solutions, but Google Pay is integrated into Google’s ecosystem and offers a seamless mobile payment experience.
Google Pay’s integration with the Google ecosystem and mobile payment features.
Venmo
A mobile payment service owned by PayPal, primarily used for peer-to-peer (P2P) payments and splitting expenses among friends. Venmo competes with PayPal in the P2P payment and digital wallet market.
Venmo allows users to send and receive money from friends, make payments, and split bills, often used for social payments.
Both are owned by PayPal and offer digital wallet solutions, but Venmo is popular for its social payment features and P2P focus.
Venmo’s social payment functionality and popularity among younger users.
Apple Pay
A mobile payment and digital wallet service developed by Apple, allowing users to make secure payments using their Apple devices in stores and online. Apple Pay competes with PayPal in the mobile payment and digital wallet market.
Apple Pay enables users to make payments at brick-and-mortar stores, in-app, and online using their Apple devices, such as iPhones and Apple Watches.
Both offer mobile payment and digital wallet solutions, but Apple Pay is integrated into Apple’s ecosystem and focuses on in-store payments with mobile devices.
Apple Pay’s integration with Apple devices and security features.
Shopify Payments
A payment processing solution offered by Shopify, designed for e-commerce businesses to accept online payments seamlessly on their Shopify stores. Shopify Payments competes with PayPal in the e-commerce payment processing market.
Shopify Payments provides an integrated payment solution for online stores built on the Shopify platform, simplifying the payment process for merchants.
Both offer e-commerce payment processing, but Shopify Payments is tailored for Shopify’s e-commerce ecosystem and emphasizes seamless integration.
Shopify Payments’ integration with Shopify’s e-commerce platform and simplified setup.
Braintree
A full-stack payment platform owned by PayPal, offering payment processing solutions, including online and mobile payments. Braintree competes with PayPal in the online payment processing market.
Braintree provides payment processing services for online and mobile businesses, focusing on developer-friendly APIs and customizable payment solutions.
Both are owned by PayPal and offer online payment processing, but Braintree is known for its developer-centric features and customization options.
Braintree’s developer-friendly APIs and customization capabilities.
Google Pay
Google Pay is not that different from Amazon Pay, Samsung Pay, or even Apple Pay. However, it does come the closest to matching PayPal for functionality and, using the influence of parent company Google, has the ability to pose a serious threat.
Like PayPal, Google Pay users can send and receive money wherever and whenever they want for almost any purpose. Payments can also be attached to Gmail messages and merchants can also use it to manage their businesses and customer loyalty programs.
Payoneer is another American fintech company founded in 2005 that offers online money transfers, digital payment services, and also provides small and medium-sized businesses with working capital. The latter feature makes it popular among eCommerce businesses, online advertisers, freelancers, and even vacation rental owners.
Sending and receiving money between Payoneer is free up to a specified amount. Like services such as TransferWise, the platform also provides a branded debit card so that funds can be withdrawn from ATMs. The same card can also be used as a hybrid credit card, but fees tend to be higher when compared to bank credit cards.
Skrill
Skrill was founded as Moneybookers in 2001 by Daniel Klein and Benjamin Kullmann and, just six years later, was one of the top three online payment solution providers in Europe.
Skrill’s merchant fees tend to be lower than those of PayPal, and while the platform has millions of global users, it is not as recognized or widespread as its larger competitor.
Nevertheless, Skrill has an attractive product suite that incorporates forex, cryptocurrency, online games, sports, and betting. However, most enjoy the platform for its digital wallet that has zero withdrawal and deposit fees and the ability to send and receive money for free.
Stripe
Stripe bills itself as “the new standard in online payments” and has millions of businesses on its platform from the smallest startups to the largest corporations. Stripe offers a fully integrated suite of payments products that is more diverse and functional than what PayPal offers.
Stripe fees are also competitive at 2.9% + 30 cents on every transaction in the United States. It may also be more convenient for business owners and consumers since the checkout process is self-hosted. In other words, there is no need to leave a merchant’s site to complete the transaction using an intermediary like PayPal.
Stripe’s API, dubbed Stripe Connect, is also more flexible in terms of payment processing. Transfers between businesses, customers, and recipients are handled with fewer manually initiated transfers, which makes the API ideal for marketplace and software platform business models. This also reduces the likelihood of fraud or delays that result from account holds.
Key takeaways:
PayPal is an American multinational fintech company that offers a multitude of money transfer and associated services around the world. The PayPal platform is multi-dimensional and enjoyed a first-mover advantage in P2P transactions, but competitors have emerged to exploit various segments of the consumer and business finance market.
Google Pay is not much different from several other payment platforms from other tech companies. However, it does come the closest to matching PayPal for functionality and can leverage the influence of parent company Google to become a serious threat.
Other PayPal competitors include business-centric payment platform Payoneer, English digital wallet provider Skrill, and financial services and software company Stripe.
Key Competitors of PayPal:
Google Pay:
Offers similar functionality to PayPal.
Can leverage Google’s influence as a parent company.
Allows sending and receiving money, attached to Gmail messages.
Merchants can manage businesses and loyalty programs.
No transaction fees for merchants accepting Google Pay.
Payoneer:
Offers online money transfers and digital payment services.
Provides working capital for SMBs, popular among freelancers.
Offers a branded debit card for withdrawals and payments.
Used by eCommerce businesses, online advertisers, and more.
Skrill:
Founded as Moneybookers in 2001, popular in Europe.
Offers lower merchant fees compared to PayPal.
Features a digital wallet with zero withdrawal and deposit fees.
Includes forex, cryptocurrency, online games, and more.
Stripe:
Offers a suite of diverse online payments products.
Used by startups to large corporations.
Competitive fees, self-hosted checkout process.
Flexible API (Stripe Connect) for various business models.
PayPal was first founded in 1998; it was called Confinity (among its founders was Peter Thiel); later, it merged with X.com, its major competitor, founded by Elon Musk (which would become known for other companies like Tesla and SpaceX). From this merger, PayPal was born. In 2002, PayPal was bought by eBay for $1.5 billion. eBay spun off PayPal in 2015, which would be listed as an independent entity. Today, PayPal owns brands like Braintree, Venmo, Xoom, and iZettle. Today, PayPal is mostly owned by institutional investors like The Vanguard Group (8.4%) and Blackrock (6.7%)
PayPal makes money primarily by processing customer transactions on the Payments Platform and other value-added services. Thus, the revenue streams are divided into transaction revenues based on the volume of activity or total payments volume—and value-added services, such as interest and fees earned on loans and interest receivable. In 2023, PayPal generated nearly $30 billion in revenues and $4.24 billion in net profits.
PayPal is a two-sided marketplace which collects a transaction fee for each payment that happens via the platform. PayPal’s flywheel is based on creating a stronger and stronger network, where the company provides a suite of services to merchants, and consumers are given affordable digital payment solutions. In 2022, PayPal processed over $1.35 trillion in global payments.
PayPal processed $1.53 trillion in payment volume in 2023, $1.36 trillion in payment volume in 2022, and $1.25 trillion in 2021—a growth of 12.5% year over year. In 2020, PayPal passed a trillion-dollar in payment volume, with $936 billion processed via the platform.
In 2023, PayPal generated nearly $30 billion in revenue compared to over $4.24 billion in profits. Compared to over $27.52 billion in revenue and over $2.42 billion in revenue in 2022.
In 2023, of nearly $30 billion in revenue, nearly $27 billion came from transaction revenues. Thus, transaction revenue represented over 90% of total revenue, while revenues from other value-added services (primarily comprising revenue earned through partnerships, interest and fees from merchants and consumer credit products, interest earned on certain assets underlying customer balances, referral fees, subscription fees, and gateway services) were over $2.91 billion, representing about 9% of PayPal’s total revenue.
PayPal had 426 million active accounts in 2023, a 2% slowdown compared to 435 million active accounts (users) in 2022, back to the 2021 level, when PayPal had 426 million active accounts.
The PayPal transaction per active account/user is a critical metric to measure the level of usage of PayPal. In 2023, the transaction per active account grew to 58.7, compared to 51.4 in 2022 and 45.4 in 2021. Thus, each active account has performed (on average) nearly 59 transactions via PayPal in 2023.
The PayPal Mafia describes a group of former PayPal employees and founders who have since become involved with other tech companies. While most know SpaceX founder Elon Musk’s association with PayPal, the company also has links with YouTube, LinkedIn, and Yelp, among many others. In addition to founding these generation-defining companies, the members of the PayPal Mafia are some of the richest men in Silicon Valley.
Acorns is a fintech platform providing services related to Robo-investing and micro-investing. The company makes money primarily through three subscription tiers: Lite – ($1/month), which gives users access to Acorns Invest, Personal ($3/month) that includes Invest plus the Later (retirement) and Spend (personal checking account) suite of products, Family ($5/month) with features from both the Lite and Personal plans with the addition of Early.
Started as a pay-later solution integrated to merchants’ checkouts, Affirm makes money from merchants’ fees as consumers pick up the pay-later solution. Affirm also makes money through interests earned from the consumer loans, when those are repurchased from the originating bank. In 2020 Affirm made 50% of its revenues from merchants’ fees, about 37% from interests, and the remaining from virtual cards and servicing fees.
Alipay is a Chinese mobile and online payment platform created in 2004 by entrepreneur Jack Ma as the payment arm of Taobao, a major Chinese eCommerce site. Alipay, therefore, is the B2C component of Alibaba Group. Alipay makes money via escrows transaction fees, a range of value-added ancillary services, and through its Credit Pay Instalment fees.
Betterment is an American financial advisory company founded in 2008 by MBA graduate Jon Stein and lawyer Eli Broverman. Betterment makes money via investment plans, financial advice packages, betterment for advisors, betterment for business, cash reserve, and checking accounts.
Braintree
Venmo is a peer-to-peer payments app enabling users to share and make payments with friends for a variety of services. The service is free, but a 3% fee applies to credit cards. Venmo also launched a debit card in partnership with Mastercard. Venmo got acquired in 2012 by Braintree, and Braintree got acquired in 2013 by PayPal.
Chime is an American neobank (internet-only bank) company, providing fee-free financial services through its mobile banking app, thus providing personal finance services free of charge while making the majority of its money via interchange fees (paid by merchants when consumers use their debit cards) and ATM fees.
Coinbase is among the most popular platforms for trading and storing crypto-assets, whose mission is “to create an open financial system for the world” by enabling customers to trade cryptocurrencies. Its platform serves both as a search and discovery engine for crypto assets. The company makes money primarily through fees earned for the transactions processed through the platform, custodial services offered, interest, and subscriptions.
Compass is a licensed American real-estate broker incorporating online real estate technology as a marketing medium. The company makes money via sales commissions (collected whenever a sale is facilitated or tenants are found for a rental property) and bridge loans (a service allowing the seller to purchase a home before the revenue from the sale of their previous home is available).
Dosh is a Fintech platform that enables automatic cash backs for consumers. Its business model connects major card providers with online and offline local businesses to develop automatic cash back programs. The company makes money by earning an affiliate commission on each eligible sale from consumers.
E-Trade is a trading platform, allowing investors to trade common and preferred stocks, exchange-traded funds (ETFs), options, bonds, mutual funds, and futures contracts, acquired by Morgan Stanley in 2020 for $13 billion. E-Trade makes money through interest income, order flow, margin interests, options, future and bonds trading, and through other fees and service charges.
Klarna is a financial technology company allowing consumers to shop with a temporary Visa card. Thus it then performs a soft credit check and pays the merchant. Klarna makes money by charging merchants. Klarna also earns a percentage of interchange fees as a commission and for interests earned on customers’ accounts.
Lemonade is an insurance tech company using behavioral economics and artificial intelligence to process claims efficiently. The company leverages technology to streamline onboarding customers while also applying a financialmodel to reduce conflicts of interest with customers (perhaps by donating the variable premiums to charity). The company makes money by selling its core insurance products, and via its tech platform, it tries to enhance its sales.
Monzo is an English neobank offering a mobile app and a prepaid debit card for consumers and businesses. It was one of the first app-based banks to enter the UK market, founded by Gary Dolman, Jason Bates, Jonas Huckestein, Paul Rippon, and Tom Blomfield in 2015. All were employees of Starling Bank, a similar neobank challenging the dominance of established financial institutions in England. The company enjoys many revenue streams: business and consumer subscriptions, interchange and overdraft fees, personal loans, and more.
NerdWallet is an online platform providing tools and tips on all matters related to personal finance. The company gained traction as a simple web application comparing credit cards. NerdWallet makes money via affiliate commissions determined according to the affiliate agreements.
Quadpay was an American fintech company founded by Adam Ezra and Brad Lindenberg in 2017. Ezra and Lindenberg witnessed the rising popularity of buy-now-pay-later service Afterpay in Australia and similar service Klarna in Europe. Quadpay collects a range of fees from both the merchant and the consumer via merchandise fees, convenience fees, late payment, and interchange fees.
Revolut an English fintech company offering banking and investment services to consumers. Founded in 2015 by Nikolay Storonsky and Vlad Yatsenko, the company initially produced a low-rate travel card. Storonsky in particular was an avid traveler who became tired of spending hundreds of pounds on currency exchange and foreign transaction fees. The Revolut app and core banking account are free to use. Instead, money is made through a combination of subscription fees, transaction fees, perks, and ancillary services.
Robinhood is an app that helps to invest in stocks, ETFs, options, and cryptocurrencies, all commission-free. Robinhood earns money by offering: Robinhood Gold, a margin trading service, which starts at $6 a month, earn interests from customer cash and stocks, and rebates from market makers and trading venues.
SoFi is an online lending platform that provides affordable education loans to students, and it expanded into financial services, including loans, credit cards, investment services, and insurance. It makes money primarily via payment processing fees and loan securitization.
Squarespace is a North American hosting and website building company. Founded in 2004 by college student Anthony Casalena as a blog hosting service, it grew to become among the most successful website building companies. The company mostly makes money via its subscription plans. It also makes money via customizations on top of its subscription plans. And in part also as transaction fees for the website where it processes the sales.
Stash is a FinTech platform offering a suite of financial tools for young investors, coupled with personalized investment advice and life insurance. The company primarily makes money via subscriptions, cashback, payment for order flows, and interest for cash sitting on members’ accounts.
Venmo is a peer-to-peer payments app enabling users to share and make payments with friends for a variety of services. The service is free, but a 3% fee applies to credit cards. Venmo also launched a debit card in partnership with Mastercard. Venmo got acquired in 2012 by Braintree, and Braintree got acquired in 2013 by PayPal.
Wealthfront is an automated Fintech investment platform providing investment, retirement, and cashmanagement products to retail investors, mostly making money on the annual 0.25% advisory fee the company charges for assets under management. It also makes money via a line of credits and interests on the cash accounts.
Zelle is a peer-to-peer payment network that indirectly benefits the banks’ consortium that backs it. Zelle also enables users to pay businesses for goods and services, free for users. Merchants pay a 1% fee to Visa or Mastercard, who share it with the bank that issued the card.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
