- PayPal has a powerful brand image.
- Despite competition, PayPal continues to find avenues for growth.
- PayPal stock has strong momentum heading into 2016.
Paypal Holdings (NASDAQ:PYPL) is ingrained in the public's consciousness as a reliable way to pay and get paid for services and products online. And as consumers continue to ramp up on online spending, this is a company well-placed to ramp up revenue and increase its dominance.
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Moreover, in order to become a major player in the growing realm of mobile payments, PayPal acquired Venmo, a person-to-person mobile payments processor.
Although there are certain potential limiting factors to PayPal's growth (more on that later), they seem to have the momentum going into 2016.
There is no shortage of online payments processors popping up on a daily basis; however, in this industry, trust is everything. In this regard, the payments giant continues to find ways to make it easier for businesses to integrate with the platform. For instance, they recently launched an inexpensive in-person payments device.
It is worth noting that PayPal's strength lies in their brand image. The way some sellers view them is contentious; however, they ensure that buyers have a smooth and safe purchasing experience.
The issue competing online payments processors are having is that consumers are less likely to share their details with a company they have never heard of, and therefore don't trust. In fact, PayPal's buyer protection is so popular that some consumers refuse to buy from sites that don't accept PayPal .
Apple (NASDAQ:AAPL) hopes that its Apple Pay offering could allow them to take a significant chunk of PayPal's market share. However, the big caveat is that one needs an Apple device to use Apple Pay- and they aren't exactly cheap. Therefore, all Apple can hope for is to convert its own consumers from PayPal to Apple Pay.
On the other hand, consumers and businesses are spoilt for choice with PayPal . From Wordpress plugins to an app for every mobile platform, PayPal have ensured that anyone with a beating human heart can pay and receive money using their service.
A big brand image, and ubiquitous entry points are major positives for a company to have; however, they will mean little without the figures to back them up. In this regard, PayPal excels.
For Q3 2015, PayPal accrued $2.26 billion in revenue, which was 15% higher than their Q3 2014 revenue figure. Importantly, they have managed to achieve this in the face of aggressive marketing pushes from Apple Pay, Stripe, and Square (NYSE:SQ). Moreover, PayPal's EPS growth came in at an impressive 29% on a year-over-year basis.
PayPal processes 100 currencies and has a presence in 200 countries. This is market penetration which none of its competitors can boast of. When we consider the fact that PayPal's Venmo is beginning to find its footing with an astounding 200% growth in transactions handled, PayPal is set to become a behemoth payments processor.
In conclusion, PayPal continues to go from strength-to-strength. Competitors such as Apple Pay and Square are putting up a good fight; however, they don't have the market penetration, branding power, or customer satisfaction which PayPal enjoys.
All things considered, PayPal stock is well placed to go into 2016 with a strong momentum behind it. And with ecommerce transactions set to go up due to a consumer trend towards increased online spending, one could state that everything is playing into the hands of PayPal. PayPal stock is a long going into 2016.