One clear reason for investors to love PayPal
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One clear reason for investors to love PayPal

When PayPal reported earnings earlier this year, it gave investors multiple reasons to like it (incredibly strong metrics across the board, lucrative new relationships, and more) and one reason not to – its further decoupling from former playmate, online auction site eBay. PayPal’s share price fell on the news, despite the fact that there are plenty of options available to it that can generate more positive performance. One of those options is its Customer Choice Initiative.

PayPal’s share price is on a tear, up 6% in 5 days!

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Source: Yahoo Finance

What is the Customer Choice Initiative (CCI)? It’s almost deceptively simple: it’s basically just a quick and easy way for customers to pick which card and bank account pays for each transaction. It also includes tokenization, which “empowers offline and more secure transactions” according to the company. This is great for customers, because it increases personalization and usability – but it’s also great from the perspective of building business deals. Here’s what PayPal’s CEO Dan Schulman had to say about it last year:

“We are an open platform and a suite of services, both branded and unbranded, that's operating system- and device- and technology-agnostic. And so ... very importantly, we're a neutral third-party platform. So we don't compete with any of our merchants or partners. We are allies in advancing digital payments.”

PayPal’s secured partnerships left right and center, which feeds into its CCI. Since it originally spun off from eBay in 2015, it has announced dozens of these deals. For as long as the company can position itself as a valuable middleman in the payments game, investors should be eager to own it.

Disclosure
Dominion holds PayPal in its Global Trends Ecommerce Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.