PayPal Essay


Write an essay on PayPal.



PayPal is an e-commerce system for businesses or individuals which offers online transactions payment for goods and services for anyone worldwide. Since its launch in 1998, PayPal is now available in 100 countries and 17 currencies and the world’s fastest growing global currency exchange (Williams, 2007).

PayPal’s Value

The PayPal has spun off from eBay and it has a very higher value as compared to its parent company. The market capitalization of PayPal will be much higher than $46.6 billion than that of eBay whose value has thought to shrink to around $34 billion.

PEST Analysis

Political :

There are various political factors that affect the company like the government regulations, policies and various laws. The rules and regulations are different in different countries that affect the PayPal. Like for example PayPal does not exist in the countries like Pakistan due to its different rules.


Different economical factors like recession, changes in exchange rates, fluctuation in prices affect the different companies. If there are changes in the exchange rates then PayPal will be highly affected as the changes in the exchange rates will affect the transaction fees of the PayPal. If there will be fall in the exchange rates then it will automatically decrease the transaction fees of the PayPal.


Socio- cultural factors are also very important for an organisation as the organisation has to operate in the social environment and sacristy itself so it cannot ignore these factors. Environmental changes, changes in the4 tastes and preferences of the customers also affect the PayPal to a very large extent. So it is required that PayPal does not overlook these factors at any cost.


New players and various business models are being introduced in the payment sector on the daily basis that requires some kind of innovation in the regulation and the policy making. Technological changes have been affecting various companies to a great extent due to which some companies can even loose business if not taken seriously. Various innovative technology changes shall not be ignored and steps shall be taken to overcome those changes.

Porter‘s Five Force Analysis

Threat of New Entrants

It is basically about how easy it has become for the new entrants to enter the market and give competition to the existing companies. There is a lot of competition due to which the threat of new entrants is increasing.

  • Fast industry growth rate: The industry is growing at a very high rate due to which the chances of new entrants is increasing as the people are becoming more and more aware of online payments.
  • WeBay: Webay , though is not very well known is trying to give a tough competition to PayPal.
  • Large industry size: The size of the industry is very large due to which many new companies are trying to enter the industry with same concept but different offers.
  • Limited regulations by the government: The government has put limited regulations on the new entrants which has made heir entry quite easy.

Threat of Substitute: This is something in which the customers can select different substitutes who are offering them the same services but at a very low price which attracts the customers and they rely on those companies.

  • P2P payments: Under these the customer can register itself with a bank or some trusted third party and the money transfers can be made by using only the email address or the mobile number. Some of the players included are Google Wallet, Square, Ribbon, ClearXchange, Dwolla. Recently Pay tm was also launched in USA which is also proving a competition for PayPal.
  • Mobile Wallets: Digital wallets are launched by the banks that replace the physical wallets that further provides the add on services like loyalty offers, ticketing, couponing and banking.
  • Pre-loaded Cards: There are various pre loaded cards sold by the retailers like the debit banks and are offered to the people who are unbanked and those who want to avoid the various banking fees.

Bargaining Power of Buyers: Today the customers live in the world where they are always connected socially. The banking payments have become very opaque and expensive. (Karen, 2014)So it can be concluded that the bargaining power of the buyers is very HIGH.

Bargaining Power of Suppliers: Earlier there was a lack of transparency in the payment systems. But now due to lots of innovation and with the support of latest technology various new payment platforms are being built which has made the bargaining power of the supplier very easy. The suppliers have started bargaining to a great extent. (Peters, 2014)

Rivalry of Competitors: There are a lot of competitions among the various banks, the card companies, de-nova banks and the super market chains. (Mathew, 2015) There are various card companies like master card, American Express and VISA that are planning to open new offerings that are based on wallets, pre-paid cards etc.

Core Competencies

Though PayPal already has a first mover advantage but there are yet more good features of PayPal. The core competency of PayPal includes convenience and safety that is given by PayPal to its customers. PayPal believes in increasing the core assets of the company. (PYMNTS, 2012) There are basic line of debit and credit cards of PayPal that generates the transaction fees. The newest innovation of PayPal gives it more footing in the world of the offline money transfers. PayPal offers lots of convenience to its customers as this application attracts lots of customers. The important core competencies of PayPal are ecommerce, Information architecture, Membership services, performance and scalability, data migration. (SHIMSHOCK Group., 2016=5)

Value Chain Analysis

  • Focused highly on R&D: PayPal has always focussed its attention on the R&D that has allowed it to stay ahead and gain differentiation based advantage.
  • Customer Service: Another advantage that PayPal has been enjoying is the great customer services. It has been satisfying its customers due to which the customers are very happy with it. (Suter, 2012)
  • Prototype technology: The prototype technology of the PayPal has also proved out to be advantageous for PayPal.


Karen, W. (17 March, 2014). Retrieved 5 June , 2016, from

Mathew, T. (2015). TATA consultancy services. Retrieved 5 June , 2016, from

Peters, R. (8 May, 2014). Prezi. Retrieved 5 June, 2016, from

PYMNTS. (15 March, 2012). Retrieved 5 June , 2016, from

SHIMSHOCK Group. (2016=5). Shimshock group. Retrieved 5 June , 2016, from

Suter, R. (12 Novemeber, 2012). Prezi. Retrieved 5 June , 2016, from

Williams, D. (2007). Pro PayPal E-Commerce. Berkeley, CA: Apress.

How to cite this essay: