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Is Facebook the Partner PayPal Needs to Stop Square?

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Dec. 25 2018, Updated 2:00 p.m. ET

PayPal under pressure to counter surging competition

From processing payments for merchants to extending loans to consumers and businesses, PayPal (PYPL) and Square (SQ) are in a tight race to extend their reach and grow their market share. For PayPal, the stakes seem high. Given its extensive reach with over 250 million customers and availability in more than 200 countries, PayPal has a lot to lose if it can’t stop its surging competition. PayPal is also battling Amazon (AMZN) and Apple in the digital payment market.

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Potential to add more than 100 million new customers

Can Facebook help PayPal keep the competition in check? According to a MoffettNathanson report cited by CNBC, PayPal could get a huge boost from its partnership with Facebook (FB).

PayPal already partners with Facebook for payments in Facebook’s Marketplace platform and Messenger app, where Messenger users can request and send payments. By extending that partnership to WhatsApp and Instagram, PayPal could gain more than 100 million new customers, according to Moffett Nathanson.

Marketplace partnerships could bring $1.5 billion

Facebook’s Marketplace, a challenger to Amazon and eBay (EBAY), is a component of Facebook’s 2.3 billion-user social network. Expanding Marketplace’s partnerships could generate $1.5 billion in extra revenue for PayPal, according to MoffettNathanson. Amazon is reportedly exploring rolling out its Amazon Pay service to compete with PayPal, and eBay is in the process of dropping PayPal as its preferred payment partner.

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