Morningstar | PayPal Is Well-Positioned to Exploit Industry Trends
PayPal has a head start on numerous competitors in terms of developing a trusted brand and a network of consumers and merchants, and its aggressive moves into mobile payments are paying off. PayPal is known for its digital wallet, but we think its capabilities in merchant payment processing are the key to continued growth.PayPal got its start by helping small merchants accept online payments and securing customer payment information in the early days of Internet commerce. Over time, the firm developed a network of online users and merchants producing a virtuous circle of usage and acceptance. Today, competition on both sides of the network is more intense--payment information can be stored in mobile phones or browsers, and both established merchant acquirers and newcomers like Stripe offer access to the digital payment ecosystem. Furthermore, PayPal has agreed--under pressure--to favor Visa’s and Mastercard’s networks over cheaper methods like ACH. However, we think PayPal's mobile strategy is interesting. We think mobile payments will lead to considerable changes at the point of sale over time. Merchants are clamoring for a frictionless payment experience, and the company's Braintree division has created just such an experience for firms like Uber. PayPal is also gaining acceptance at physical merchants under its legacy brand as well as with Venmo. Technology companies are learning that financial services and payments are not easy industries to break into, opening the door to partnerships with PayPal. Already, the company is working with Microsoft's Skype, Google, and Apple--firms that were recently considered dangerous potential competitors. We think that PayPal is capable of bridging the wide gap between technology companies and the highly regulated global financial system.Furthermore, the payment pie is still expanding at a rapid rate. In 2017, 46% of PayPal's revenue came from outside the United States. Many countries are bypassing the traditional bank-intermediated payment ecosystem for a completely digital experience. PayPal's capabilities leave the company well positioned to capitalize on this trend.PayPal Holdings is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. The company's combined payment solutions include its PayPal, PayPal Credit, Braintree, Venmo, Xoom and iZettle products and services. PayPal's payment solutions enable the company's customers to send and receive payments. PayPal helps merchants and consumers connect, transact, and complete payments, whether they are online, on a mobile device, in an app, or in person. The company provides proprietary payment solutions accepted by merchants that enable the completion of payments on the company's Payments Platform on behalf of its customers.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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