skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Ovum view

Summary

Only weeks ahead of its demerger from its parent company, eBay, PayPal has announced the all-cash acquisition of cross-border P2P remittance provider Xoom for $25 per share (equivalent to $890m). This latest deal follows other recent notable acquisitions, including mobile wallet platform provider Paydiant for an estimated $280m in 2015 and new-breed payments gateway provider Braintree (with its domestic P2P brand Venmo) for $800m in 2013. Freed from the shackles of eBay with no debt, $5bn in cash, and new shareholders through its public listing on Nasdaq, PayPal will likely remain highly acquisitive as it seeks to expand its global capabilities.

PayPal is diversifying to reinforce its global position

With significant momentum behind it following its separation from eBay, PayPal is pursuing a global strategy to expand both its payments capabilities and geographic spread. This includes an expansion of its consumer-focused capabilities, as highlighted by its acquisition of Xoom. The acquisition gives PayPal significant presence in the cross-border remittance space and a foothold in key emerging markets. Xoom reportedly processed more than $7bn in transactions in 2014, despite having a core US customer base of only 1.3 million consumers. Although PayPal has always had a strong presence in the P2P space, this has primarily been for domestic transactions only.

Central to PayPal’s broader strategy – particularly in light of the growing competition it faces from newer entrants such as Apple, Google, and now Samsung – is its growing focus on remaining technology-agnostic and offering open-stack solutions. In the PayPal roadshow presentation released in advance of its listing on Nasdaq, PayPal talked about its “open commerce platform.” This incorporates its core PayPal wallet, rapid loans to consumers via PayPal Credit, in-app payments via Braintree, and in-store payments via Paydiant through the development of merchant-led wallet and app loyalty programs.

This approach signifies a switch from PayPal’s older strategy of seemingly trying every new payment technology and seeing what sticks; it provides the company with a clearer strategy of expanding capabilities across the payments value chain. PayPal will face significant challenges in the coming years, but by diversifying its portfolio it is reinforcing its position and ensuring that it is well placed for further market growth.

Appendix

Further reading

2015 Trends to Watch: Payments, IT0003-000628 (November 2014)

“Payments innovation needs to go global for true disruption,” IT0059-000009 (April 2015)

“Android Pay is the next step in Google’s mutating payments strategy,” TE0003-000834 (March 2015)

“An independent PayPal will be a stronger business,” TE0003-000802 (October 2014)

Author

Gilles Ubaghs, Senior Analyst, Financial Services Technology

gilles.ubaghs@ovum.com

Recommended Articles

  • Service Provider Markets, Consumer & Entertainment Services,...

    MWC 2018 Highlights

    By Ronan De Renesse 27 Feb 2018

    Over 20 of our senior Ovum analysts and consultants attended this year’s Mobile World Congress in Barcelona at the end of February. In between meetings, briefings and presentations, our analyst team were blogging and tweeting about key developments, trends and rumors. Have a look through our daily MWC 2018 Highlights to find out what happened.

    Topics 5G AI IoT Cloud Payments SDN/NFV Smart home

  • Internet of Things

    IoT Viewpoints 2018

    IoT Viewpoints explore the IoT opportunity in 2018 and beyond. Download our latest e-book to get our newest collection of thought leadership articles on the emerging IoT trends, technologies and opportunities.

    Topics IoT

  • Consumer & Entertainment Services

    US pay TV: Is it facing an existential threat?

    By Adam Thomas 28 Mar 2018

    With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.

;

Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700


Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

+44 (0) 207 551 9047 - Operational from 09.00 - 17.00 UK time

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 788 597 5160 or email us at pr@ovum.com

Contact marketing - 
marketingdepartment@ovum.com

Already an Ovum client? Login to the Knowledge Center now