PayPal to Hit USD100 Trillion Market
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Dan Schulman, PayPal CEO instructed CNBC that the estimated digital payments industry may hit the $100 trillion market with the rapid growth of the FinTech industry.
In an interview with Wilfred Frost on “Closing Bell,” Tuesday Schulman said, "It could be, you know, a $100 trillion market. That is sort of the market [total adjustable market] we are playing into. We may have, like, 1-2% share of that market today.”
As PayPal’s popular mobile payments service Venmo continues to collaborate with more businesses, Schulman said that there are no traces of disappointing holiday sales and a potential global slowdown will negatively affect the industry. Processed payments made within the platform increased at 80% year-over-year in the last quarter and he foresees PayPal could process more than $100 billion worth of transactions in 2019.
"We are living in the space of e-commerce and e-commerce is exploding still around the world," Schulman said. "There is an explosion in digital commerce and we are riding that wave. What we see is pretty positive."
The CEO noted that Venmo has been focused on partnering with companies across various industries to better serve the consumers. PayPal is already with big names like Facebook, Alphabet’s Google, Microsoft, and Alibaba.
"Businesses are thinking about how they can use technology to better serve customers," he said. "I think it is going to be less and less about how does one company hyper-serve customers. I think the new way of the world going forward is how do companies take the best of their platforms [and] put them together to better serve businesses."
Schulman also tackled on competition brewing with FinTech services like Zelle, driving out doubts that it would make it any harder for Venmo to succeed. Zelle is a digital payments network acquired by seven banks including J.P. Morgan Chase JPM and Bank of America BAC.
He views it as a sign that companies are working together more and share platforms, saying that Venmo also partners with other financial organizations. Schulman points out the difference between the two platforms are the way customers use the platforms. Venmo handles smaller transactions averaging about $50 done at least 5 times a week while Zelle handles bigger transactions averaging $250 once a month.
As of Tuesday, PayPal had an approximately $111 billion market cap.
"P2P, or peer-to-peer payments, is exploding continuously in the market. It is a multi-hundred-billion-dollar marketplace. This will definitely not be a winner take all. I think the two will live side by side and it won't be a winner takes all.” Schulman added.
Shulman said that Paypal is knocking on marketplaces across the globe. Asia is of its fastest-growing regions, Schulman. This includes countries such as China, Japan, and India. It is building relationships with e-commerce markets such as Amazon and Alibaba. PayPal note 40% year-over-year growth and it has been the main strategy for the e-commerce company to compensate for slowing growth has impacted PayPal’s former parent company eBay that it
Schuman said, "But the real secret to Venmo is that it is not just a payment transaction. It really is sticking into this desire in the millennial generation to tie into your social network. So it is really a social experience." This includes issuing debit cards to clients and retailers chance to use the service. He does not expect Venmo to be profitable for the next two quarters, but he said that partnerships have allowed the platform to monetize the service. “It could be a very profitable one for us over the medium to long term."
Schulman gave a clue during the interview that Venmo could be doing more to further leverage social media.
"There is more and more we can do with Facebook," Schulman said. "They can take the best of our platform assets to serve their customers in ways they want to."
PayPal shares have surged by 13% this year and grown to more than 21% for the past year and the stock advanced modestly Tuesday to $95.02.