PayPal analyst downgrades and cites competition

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As more businesses enter the online payments arena, PayPal faces competitive pressures, a MarketWatch report from Wednesday, November 17 suggests.

Harshita Rawat, analyst at wealth management firm Bernstein, downgraded his outperformance rating to market performance, and Rawat is said to be worried about greater aggression from rivals who adopt similar services, including Amazon and Shopify.

According to Rawat, these two companies account for about 32% of all commerce in America, and PayPal risks losing its once pristine status to the competition. Part of his reasoning is that much of PayPal’s business comes from small businesses, which now have Shopify as an option.

“Amazon does not currently accept PayPal and has just agreed to accept Venmo from 2022,” she wrote in a letter to investors. “Shopify has ambitions to build its own payments business and has aggressively pushed its merchants to convert to the Shopify payment platform (and also the Shop Pay button).”

Rawat called Shopify an “unassailable competitor” for the small business demographics.

PayPal’s growth could also eventually run out of steam, with market share gains potentially slowing – perhaps “by a thousand reductions” due to new technologies such as the ability to automatically fill in credit card information on credit cards. Internet browsers. This, Rawat said, interferes with PayPal’s usual business mode of trickling businesses into manually entering credit card information.

Apple Pay could also be a challenge, with buy-now, pay-later, and similar payment innovations on the rise.

PYMNTS reported on PayPal’s partnership with Amazon to allow U.S. buyers to use Venmo at checkout, which is expected to begin in 2022.

Read more: PayPal: Venmo Comes to Amazon, Pay Later User Reaches 9.5 Million

PayPal’s third quarter results also showed the continued influence of e-commerce on business results and bottom lines.

PayPal’s partnership with Amazon was touted by CEO Dan Schulman as a development that would allow the company to work with a wider range of markets.

During a call, Schulman said Amazon was an “extremely important player” and that eBay had faded as a contributor to payments and sales. The Venmo option is also important thanks to Amazon’s massive market share in the United States

Venmo’s volume increased 36% in the last quarter to $ 60 billion, which is also due to crypto activity.

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