Mcommerce drives PayPal growth
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Mcommerce drives PayPal growth

PayPal reported incredibly strong figures for its third quarter last month: 21% up on revenue, and 31% up on profit, both year-on-year. What’s driving this growth? In large part, it’s the massive increase in M-commerce – that’s Ecommerce using a mobile phone – that is becoming more ubiquitous by the day. As more and more people continue to buy things on their mobile phones, PayPal could see the number of active accounts on its platform increase beyond its current 218 million. Because it might be the best-positioned company in the world when it comes to capitalizing on M-commerce.

PayPal’s share price has gone up 88% year to date

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SOURCE: Yahoo Finance

If you find yourself spending more and more time on your smartphone, don’t despair – you’re not alone. Earlier this year, research from consulting group comScore showed that twice as much time is spent shopping on mobile phones as it is on PCs. Business Insider predicts that this M-commerce will continue to expand, becoming responsible for 45% of total Ecommerce sales by 2020. That’s about $284 billion! This bodes very well for PayPal.

Mobile payment volume for the company rose by an incredible 54% in its third quarter, taken against the third quarter of 2016. Mobile now accounts for a full 35% of the company’s total payment volume. This made it a key driver of growth for PayPal last quarter. Boss Dan Schulman said:

“Mobile payments led our growth again, growing approximately 54% to $40 billion in the quarter. We saw these trends are the direct result of investments made across the business. We have increased the availability of our platform and significantly improved our customer experience across an ever-growing suite of products and services.”

Schulman also stressed that "mobile is becoming the defining force in digital payments. It is rapidly blurring the distinction between online and offline and accelerating the adoption of digital payments."

Probably the company’s most powerful move in this area has been the simple-sounding “One Touch” platform. Users register their mobile device and become “permanently logged in”, letting them check out at any website which accepts PayPal with – perhaps unsurprisingly – a single touch. This is a huge convenience boost from the days of filling in online forms with bank details and passwords.

As Ecommerce and M-commerce continue to increase, PayPal has everything it needs to build on its early lead.

Disclosure

Dominion holds PayPal in its Global Trends Ecommerce Fund.


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