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Why PayPal Is Eager for More Uber-Like Investments

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Jun. 26 2019, Updated 1:54 p.m. ET

PayPal is keen to build long-term relationships

PayPal (PYPL) invested $500 million in the purchase of a stake in Uber Technologies (UBER) just before the ride-hailing company went public in May. At a recent Bloomberg conference in London, PayPal CEO Dan Schulman said that the company was open to making more strategic investments like it did in Uber.

As per Schulman, PayPal is a long-term investor that likes to invest in relationships rather than in short-term gains, according to a report from Bloomberg.

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Uber is one of PayPal’s business customers. It was one of the early merchant adopters of PayPal’s Venmo checkout service, which allows people to pay for products and services using funds in their Venmo digital wallets. Uber is not only America’s top ride-hailing company with a 69% market share but also one of the leading restaurant-delivery providers in the country. Its UberEats service held a 22% share of the restaurant delivery market in the US in the first quarter, coming in third after DoorDash at 29% and GrubHub (GRUB) at 32% share, according to data from Second Measure.

PayPal’s strategic investments span various industries

Uber’s leading position in the ride-hailing and restaurant delivery markets make it a strategic partner for PayPal in its push to become the top digital payment and financial services provider for consumers and businesses.

PayPal’s other strategic investment is MercadoLibre (MELI), a leading e-commerce and digital payment provider in Latin America. PayPal made an investment of $750 million in the business early this year. PayPal is also an investor in Acorns, a platform that allows users to automatically invest change after making a purchase with a card or digital wallet. Comcast (CMCSA) also bought a stake in Acorns and struck a content deal with it early this year.

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