How PayPal Hopes to Drive Its Payment Services



Asians currently prefer cash to digital payments

Recent studies have shown that cash remains the main method of payment among consumers. For example, a PayPal (PYPL) study released last year found that cash is still the preferred method of payment in much of Asia, despite the region having many digital payment services such as WeChat by Tencent (TCEHY) and Alipay by Alibaba (BABA) affiliate Ant Financial.

For digital payment processors such as PayPal and Square (SQ), consumers’ preference for cash payments presents a challenge because it slows down the expansion of the digital payment market.

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Secure, private transactions could draw people to digital payments

PayPal thinks it has figured out how to get people to adopt digital payments. Speaking to CNBC, PayPal’s chief technology officer Sri Shivananda pointed out that security, privacy, and reliability are the three main barriers to consumer adoption of digital payments. Digital payment companies are hoping to convince people to shift from cash to digital payments by investing in secure, private, and reliable transactions.

PayPal processed $132 billion worth of payment volume in the first quarter, which represents a growth of 32% year-over-year.

PayPal aims to be a one-stop-shop financial solution

In addition to digital payment processing, PayPal has ventured into loans and investment services as it aims to be a comprehensive financial services provider. Square, Amazon (AMZN), and Ant Financial are also in the lending business, with Amazon having advanced about $3 billion in loans to its customers since 2011.


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