The Stunning Story of PayPal – the World’s Biggest Online Payment System
Making online payments has become a regular habit for many of us. It saves a lot of time and effort to pay the bills and taxes or to shop for clothes and gifts with just a few simple clicks.
But not long time ago, this would have been considered an alternate reality. People would not trust introducing their financial data on a website – and it’s completely understandable why. But as services began to increase their security and more people started to embrace the idea of paying online, it turned out to be one of the biggest blessings that technology has brought along.
When it comes to online payment systems, PayPal is by far the leader in the niche. They are #73 among websites of any kind by traffic. And it didn’t happen by chance.
In 1998, Peter Thiel, Max Levchin, Luke Nosek and Ken Howery created Confinity, who became the prototype for the platform that’s still used today. PayPal as we know it was founded in March 2000, when Confinity Inc. merged with Elon Musk’s X.com.
To have a better understanding of the amazing adventure that turned PayPal into the giant they are today, take a peek at the infographic below, created by Play-n-Pay.
2002 was a milestone in the company’s history, as it was the year when they joined the publicly traded companies, and their stock grew to 55% on NASDAQ. Moreover, in the same year, eBay bought PayPal for $1.5 billion, making it the only payment solution available for eBay transactions.
Between 2002 and 2014, the company continued to buy different apps and platforms. At the same time, they focused on gaining the trust of their target users by delivering them better services and teaming up with already trusted brands – Google, Facebook, Messenger, Vodafone, Visa, MasterCard or Alibaba are just a few of them.
Starting with 2013, the PayPal board started considering splitting sides with eBay, which happened one year later. This turned out to be a very inspired transition, as in the first day after the official separation, PayPal’s market value had skyrocketed and reached a record of $48 billion.
As months went by, the revenues shoot up by 16% and the value of transactions was 20% higher. In the second quarter of 2015, PayPal’s shares grew by 5.4%, while eBay’s only half – 2.4%.
Today, there are over 203 million active users on PayPal, with an average of 32 transactions per account. The service is available in 202 countries and allows you to receive money in more than 100 currencies, to hold balances in 25 currencies, and withdraw in 56 currencies.
It is considered as the second most trusted payment system in the U.S., after credit cards, and is the third option after VISA and MasterCard. And the most interesting fact is that not only “young people that were born with devices in their hands” use it – 15% of the Baby Boomers and the Gen X’s resort to it. Moreover, 75% of the U.S. consumers also hold an active PayPal account besides a credit card.
PayPal serves over 760,000 websites worldwide, and they do such an amazing job that they received more than 20 awards for excellence.
The actual market share for PayPal is 83%, which is outstanding. The second place for online payment systems is taken by Authorize.net, which hold only 2.11%. This means that any of its competitors would have a lot of catching up to do.
In conclusion, successful stories have a lot of work and passion behind. And, most notably, the will to succeed – if any of the founders had given ear to those who voted PayPal as one of the worst business ideas of 1999, the online payment system would have looked completely different!