Examining PayPal’s Strategic Partnerships

Neha Gupta - Author

Sep. 12 2017, Updated 7:36 a.m. ET

Expanding the addressable market

In the last few months, PayPal (PYPL) has entered into some strategic partnerships as it works to expand its addressable market and increase the relevance of its platform.

PayPal is in a race against Square (SQ) and Amazon (AMZN) to capture revenues in the digital payments market. PayPal is betting on the deals it is making with strategic partners to help it tackle the growing opposition from payment rivals.

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Baidu and PayPal find common ground

Baidu (BIDU) is one of PayPal’s recently added strategic partners. Baidu and PayPal combined their digital payment services to make it easier for millions of Chinese consumers to pay for purchases from overseas vendors. Baidu is the largest Internet search engine provider in China (MCHI).

PayPal cooperates with banks

In pursuit of new growth opportunities, PayPal has sought to work closely with banks, which once viewed the payment processor as a rival. As part of its ongoing relationship-building initiative with banks, PayPal recently announced deals with Bank of America (BAC), JPMorgan Chase (JPM), and Citigroup (C) to simplify online shopping for their cardholders.

Boost to international business

PayPal counts Alphabet’s (GOOGL) Google and Apple (AAPL) among its strategic partners. With Apple, PayPal provides payment support for iTunes users in 12 countries. As such, the arrangement with Apple has the potential to boost PayPal’s international sales. For 2Q17, PayPal reported international revenues of $1.4 billion, up 16% year-over-year, as shown in the chart above.


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