PayPal and Uber are partnering to deliver a seamless new payment experience

12:27 08/05/2018

PayPal Holdings Inc. PYPL  recently announced that Uber and Venmo are partnering to deliver a seamless new payment experience available with Uber and Uber Eats. Uber customers in the United States ordering rides and food will soon be able to pay with their Venmo balance, linked bank account, credit card or debit card so they can easily split the cost with friends and family in the Venmo app, for no additional fee. Venmo, a service of PayPal, Inc., is a leading mobile app in the U.S. used to move money between friends and family and pay at millions of retailers.

According to a research report by the consultancy company, Capgemini, and bank BNP Paribas, the global digital payment volumes are projected to surge by an average 10.9% by 2020, reaching approximately 726 Billion transactions. The report estimates that volumes generated by emerging economies will grow by 19.6%, which is about three times the rate of mature economies. Emerging Asian countries, led by China and India, are expected to lead with growth of 30.9% in volumes. Increased digitization of corporate B2B payments is affecting digital the payment infrastructure. In mature markets, more and more small and medium-sized businesses are using digital invoicing and transactions, virtual cards, as well as cloud-based finance and accounting.

The blockchain technology is expected to play a major role in the future of digital payment processing solutions. The report indicates that in trade finance, banks and FinTech companies are exploring blockchain-based smart contracts to optimize transactions. Anirban Bose, Head of Global Banking and Capital Markets for Capgemini, explained that, "Within this new and dynamic ecosystem, payments industry participants must strategically reassess their roles… Banks must embrace this opportunity to enhance their offerings in collaboration with FinTechs and third-party developers. Breakthrough technologies and significant industry advances, such as Open APIs, instant payments, blockchain, and regulatory standardization, will encourage collaboration.”

In related news, PayPal Holdings, Inc. PYPL  announced recently that it has agreed to acquire Simility, a leading fraud prevention and risk management platform, for a purchase price of $120 million in cash, subject to certain adjustments. The acquisition of Simility will enhance PayPal's ability to deliver fraud prevention and risk management solutions to merchants globally.

"Digital commerce has exploded, and fraudsters have taken note, adapting and developing new methods to carry out their crimes," said Bill Ready, chief operating officer, PayPal. "PayPal has been at the forefront of developing innovative fraud prevention and risk management solutions for nearly 20 years, and now, merchants will be able to configure those solutions to manage the unique complexities of their businesses. Together with Simility, we will be able to put more control in the hands of our merchants to fight fraud while helping make commerce experiences faster and more secure.”

According to U.S. based market research and business intelligence company, Crystal Market Research, the Mobile Point of Sale Market (mPOS) was worth USD $9.73 billion in 2014 and is expected to reach approximately USD $46.28 billion by 2023, while registering itself at a compound annual growth rate (CAGR) of 18.92% during the forecast period. mPOS devices are expected to drive an increased usage of payment cards in Global markets, such as China, India and so forth. The global POS terminals/systems market is highly fragmented across vertical markets while a POS terminal itself enhances the shopping experience for customers by minimizing the payment processing time and provides companies with information pertaining to the sales of their respective products.

"Our customer choice initiatives, partnership strategy and continued focus on being a customer champion are contributing to our sustained strong performance. We are pleased to have announced four acquisitions in the second quarter that advance our merchant value proposition and geographic reach. Our strategic decision to become an open platform committed to partnerships has increased the value that PayPal can offer our customers, both consumers and merchants," said Dan Schulman, President and CEO of PayPal.

Person-to-Person (P2P) volume grew 50% to more than $33 billion, and represented approximately 24% of TPV in the second quarter. Venmo, the company's social payments platform, processed more than $46 billion of TPV over the past twelve months. In the second quarter, Venmo processed more than $14 billion of TPV, growing 78% over the same period last year.

PayPal (NASDAQ:PYPL) PYPL  expects revenue to grow 17 - 19% at current spot rates and 16 - 18% on an FX-neutral basis, to a range of $15.30 - $15.50 billion. As previously disclosed, full year 2018 revenue guidance includes an expected impact related to the sale of U.S. consumer credit receivables to Synchrony Financial of approximately 3.5 percentage points for full year 2018.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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