The Growth of PayPal - Essay Sample

Introduction

In today's business world, for small business to be able to compete, they need access to the right digital tools that help them reach global customers. Over the years small businesses in Canada have continued to grow with the presence of PayPal, and they are now able to access both the local and international audiences. But perhaps the most astonishing transformation in Canada is the growth of e-commerce particularly PayPal. For more than 18 years, PayPal has been pushing the boundaries of payment industry in Canada as it helps small businesses access foreign markets and trade opportunities by offering a range of products, innovative solutions, and experiences to customers. This growth in Canadian e-commerce has seen PayPal transform from being a small business because of its constant innovation, good customer relation, and partnership strategy.

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The growth of PayPal since its launch in Canada over a decade ago can be attributed to its risky ventures and crucial innovations. For instance, when PayPal first announce their partnership with Visa and MasterCard, there were serious concerns especially from the investors who were majorly concerned about their bottom line impact. For the investors, this meant a much more increased volume of credit card payment and thereby a serious increase in fees paid to the credit companies. According to Ballard, during that year, everything played out as the investors expected since the company's incurred one of the largest operating expense which made the PayPal reduce other expenditures to prevent a loss of over 38 percent of their annual revenue. However, this turned out to be a crucial investment as, after a few years, the growth of PayPal within Canada and internationally can be attributed to the collaboration with Visa and MasterCard.

PayPal having launched the first money transfer in Canada placed PayPal Canada at the center of the globally recognized hub, thereby fostering a stronger connecting with the MaRS community. The MaRS community is one of the most valued financial technology clusters which helps to connect the financial service sector with hundreds of emerging technologies in financial services, cryptocurrency, and other payment-related technologies. According to research, PayPal Canada was one of the early partners of MaRS community and has since then enabled PayPal to focus on continued essential innovation to millions of active online Canadian customers and hundreds of their small businesses (Ahmed et al. 39). This move has also allowed to PayPal Canada to access even the most remote areas in Canada thereby supporting small businesses located areas outside the Urban centers hence helping these rural small businesses to compete equally for global customers. This, in turn, bridges the gap in the growth between rural small businesses and urban established enterprises.

PayPal growth Canada can also be attributed to its commitment to customer championship and collaboration by making the platform easy, secure, more affordable and available for small businesses and individuals across Canada and the entire world to access financial support and services. PayPal Canada states that the customer support center is one of the company's largest expenditure with individuals who are ready and available around the clock to help PayPal customers with all the inquiries. PayPal has also provided more options in response to customers' requirements, and as a result, fewer calls have been received by the management in the recent past. According to Ballard, this indicates the extent to which the company has gone to invest in making the payment platform easy to use. Additionally, another report by PayPal indicates that the increase in transaction cost by more than 5 percent has been offset by a significant reduction in customer support as a percentage of revenue. In particular, the result is that the international opportunities previously pursued by large business enterprises are now inviting more and more small businesses since with the help of PayPal, they are now easily accessible through e-commerce. This has led to rapid growth of PayPal not only within Canada but also in the international markets.

The continuous growth of PayPal can also be attributed to the effective management of a partnership strategy. Ideally, the partnership was initially designed to advance PayPal's momentum on the top line, the company has managed to balance between the bottom line and the top line growth, therefore, the overall growth of the company. For instance, PayPal deals with credit card companies including Visa and MasterCard quickly grew to include Discover Finance and Citigroup. The agreement sent was that PayPal to quit the promotion of individual users' bank accounts overusing credit or debit cards. In return PayPal would receive a discount on processing fees; however, according to Ballard, the move turned out to be lucrative as PayPal now receives more than it bargained for, For example, the deal resulted into a simpler PayPal sign-up process which does not require bank accounts. Similarly, this strategic partnership resulted in partners promoting PayPal. The agreement for customers to set their default payment to a credit card has resulted to increased income to these credit card companies, and with PayPal transacting millions, credit companies are now urging their customers to add their credit cards to PayPal.

Conclusion

In conclusion, the rapid growth of PayPal as a financial service provider within Canada and across the world is as a result of important partner strategy management, customer relation, and constant innovation. As evidence suggests, PayPal often invests in risky but innovative ventures which despite the investor's fear, often turn out to be a sound investment. In addition, PayPal customer relation in terms of support centers has not only enabled small businesses to access the global market but has also increased PayPal clients to include small businesses outside the developed urban centers. Moreover, with strategic partner relation and agreement, PayPal has accrued benefits which include easy sign-up process, promotion from partners as well as increased engagement with PayPal users.

Work Cited

Ahmed, Usman, et al. "Filling the gap: How technology enables access to finance for small and medium-sized enterprises." Innovations: Technology, Governance, Globalization 10.3-4 (2015): 35-48.

Ballard, John. "How PayPal Is Defying Expectations and Boosting Its Bottom Line." The Motley Fool, The Motley Fool, 28 May 2018, www.fool.com/investing/2018/05/28/how-paypal-is-defying-expectations-and-boosting-it.aspx.

PayPal Canada. "Canadian Small Businesses That Leverage E-Commerce Grew 22 Percent in 2017." Canada Lifts Visa Requirements on Romania and Bulgaria, PRNewswire, 4 Oct. 2018, 06:00 ET, www.newswire.ca/news-releases/canadian-small-businesses-that-leverage-e-commerce-grew-22-per-cent-in-2017-695133111.html.