PayPal keeps innovating by being innovative. You might think that sounds a little trite and simple, but the bottom line is that the answer is as simple as that. It has always been a payment service pushing at the edge of what is possible and disrupting the status quo. When PayPal burst onto the market, the word fintech was not in existence, and many sources still date fintech’s emergence to the post-2008 financial crisis. However, PayPal has been offering alternative technology-driven solutions for financial transactions since it first emerged in the late 1990s.
At that time, cash was used for everyday transactions, and banking was dominated by traditional retail banks. Stuffy and conservative in nature, these banks had strict opening hours and operated over-the-counter banking services from highly secure brick-and-mortar locations with strong boxes, safes, vaults, and patriarchal bank managers. Banking was a traditional business, and the closest the sector had got to innovation was the introduction of automatic teller machines (ATMs) and check guarantee cards. Payments into checking accounts could take five days to clear and checks frequently got lost in the postal system. Despite utopian dreams of home banking and diversification, banking services really had not changed very much at all.
While people grumbled about the branch closing too early or not being open when they needed it, in general, the system worked. We paid for our goods in shops with cash, sent checks in the post for larger transactions (and waited days for them to clear before the goods were despatched), and had bankers’ drafts drawn up for substantial money transfers. Credit cards and store cards existed, but many people were (and still are) very wary of high interest rates and running up unserviceable levels of debt. Even credit card transactions required a carbonated imprint of the card being despatched to the holders’ card issuer for funds to be allocated. The only payment method that was instant and guaranteed was cash.
This was all well and good at a time when the vast majority of shopping took place in person in stores and malls across the country. However, the arrival of the World Wide Web and the promises of e-commerce changed everything. People needed a secure way to send money for purchases, and traditional banks did not have the answers. The e-commerce bust, which followed the initial boom, has been blamed on many things, including a general overegging of the market, insufficient internet speeds and infrastructure, and no understanding of order fulfilment. However, the lack of credible payment options on most retail sites cannot be understated, and no one felt confident about sharing sensitive banking details, sending cash in the post, or waiting forever for checks to clear.
That is probably why so few of the early internet companies are still around. Two names that stand out, along with Amazon, are eBay and PayPal. PayPal’s unique system of being able to transfer money from buyer to seller without anyone needing to divulge any personal details was an absolute game-changer. eBay snapped up the forward-looking Silicon Valley payment innovator, and the rest, as they say, is history. eBay and PayPal might have subsequently gone their separate ways, but each company’s success was dependent on the other. The other big-name success of the time, Amazon, relied on incredibly deep pockets and did not turn a profit for nine years. In that intervening period, the banks had modernized and alternative fintech solutions were emerging to make the internet more accessible and secure.
PayPal went from being an exclusively peer-to-peer money transfer site to becoming the preferred payment platform on millions of websites around the world β a third of all websites offer PayPal as a digital payment solution at checkout. In countries where PayPal is available, many people always choose to pay with it.
PayPal did not stay still and rest on its laurels as being the first secure online payment transfer platform. It has continued to innovate to ensure it has a full suite of products. While it still offers peer-to-peer money transfers, which are combined with a social aspect through its acquisition of Venmo, it also offers payment solutions for environments where people value security. It has always pioneered increased security from two-step authentication to integration with first touch and then facial recognition security.
In a world where online fraud is one of the fastest-growing crimes, the need for robust online security cannot be underestimated. Other than online banking, online casinos are probably one of the locations where customers need to divulge the most sensitive data to verify their credentials and access services. This is why PayPal is such a popular payment choice for bettors, iGamers, and casino game players. Casino.org’s deep dive into Paypal Casinos provides an in-depth guide to the best places to lay your bets, without you having to divulge information you donβt want to. PayPal has leveraged its ease of use and lack of need for invasive information to take over much of the wider gaming payments market and shows no sign of stopping.
Earlier this year, Alex Chriss, President and CEO of PayPal, reiterated the company’s commitment to innovation, saying,
“PayPal is on a mission to revolutionize commerce, globally, and today we are starting the next chapter. With nearly 400 million consumer accounts, and 35 million merchant accounts, PayPal handles transactions for about a quarter of the world’s e-commerce transactions each year, but more importantly, shoppers trust PayPal to power their payments.”
He claimed that they are introducing new innovations for 2024, which include:
- A transformed checkout experience with the use of passkeys
- Fastlane checkout allows customers to pay with one click β as this is the point where many customers abandon their baskets when things become complicated
- Smart receipts
- Advanced offers so merchants can tailor future offers to customers while also allowing easy-to-use privacy controls if customers do not want their data shared
- Reinventing the PayPal app to give customers more reasons to use it every day by including loyalty incentives, best prices, and the most convenient ways to pay
Above all else, PayPal keeps innovation because if they do not, someone else will. A fintech that is standing still will soon find themselves going in reverse.