PayPal-SoftBank showdown in Latin America
There’s no end in sight to what now looks to be a clear tit-for-tat between PayPal (PYPL) and SoftBank (SFTBF), the parent company of American mobile operator Sprint (S). Less than a week after SoftBank launched a new $5.0 billion fund to invest in Latin American technology startups, PayPal announced that it was investing $750 million in the purchase of a stake in MercadoLibre (MELI), Latin America’s leading e-commerce and digital payment company.
For its special Latin American tech fund, SoftBank identified e-commerce and digital financial services among its particular areas of focus. In light of this, a showdown is brewing between PayPal and SoftBank in Latin America’s digital economy.
SoftBank backs PayPal’s rivals in Japan and America
Through its recent actions, SoftBank has shown that it wants to give PayPal a serious run for its money in the digital payment space. Last year, SoftBank teamed up with Paytm to launch a PayPal-like mobile payment service called PayPay in Japan, one of PayPal’s key international markets. Paytm, backed by deep-pocketed corporate giants such as Alibaba (BABA) and Berkshire Hathaway (BRK), is one of PayPal’s fiercest rivals in the Indian digital payment market.
In the United States, SoftBank is seeking to merge Sprint with T-Mobile (TMUS). This merger is set to come after T-Mobile launched a financial service called T-Mobile Money last year to compete with PayPal.
So far, PayPal is taking the competition from SoftBank in stride and has continued to add new customers. During the fourth quarter, PayPal added more than 13 million new customers to close the year with 267 million active customers on its platform.