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Why PayPal’s Deal with Oro Is So Important

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B2B platform provider

PayPal (PYPL) recently announced a global partnership with Oro, the B2B (business-to-business) e-commerce platform of OroCommerce.

Under the partnership, PayPal will provide integrated payment solutions to OroCommerce merchants. OroCommerce provides more than a basic B2B platform. It also offers streamlined buyer-to-seller relationships, automated business workflows, and integrations with customer relations management (or CRM) software.

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A $12 trillion market

The greatest benefit to PayPal in this partnership is that tying up with Oro gives it exposure to the massive global B2B e-commerce market. Frost & Sullivan, a business consulting firm, estimates that the global online B2B market will grow to $12.0 trillion by 2020, from $5.5 trillion in 2012. The above graph depicts the projected B2B e-commerce market growth.

At $12.0 trillion, the online B2B market is nearly three times more than the B2C (business-to-consumer) market. PayPal is a market leader in B2C payments. So expanding into B2B means more growth opportunity.

As part of its effort to pursue enterprise payment deals, PayPal launched a new PayPal Business app (application) last year that also offers automated invoicing. Since launching the app, it has landed several merchant payment deals.

Defending market share

PayPal is facing tough competition from Alibaba (BABA), Apple (AAPL), Samsung (SSNLF), and Square (SQ) in the digital payments market. The deal with Oro could help PayPal defend its market share and boost its chances of success in the business payments market. The merchant payments market is shaping up to be more lucrative as companies take advantage of the Internet to have more international sales.

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