Our PayPal SWOT analysis examines the Strengths, Weaknesses, Opportunities and Threats of the payment processing company that's leading the e-banking industry.
We don’t realize at times how accustomed we all have become to having our lives so simplified thanks to technology. Just a few decades back, we had to do so much to get basic things done.
Banking is one such example now that it is so easy to send or receive money via a tap on your smartphone. In this PayPal SWOT analysis, we will see how this company has done in payment processing practices.
Most of you might already be aware, but in case you have not heard of it, PayPal is basically a multinational financial technology company. It was started in 1998 when it was called Confinity and is headquartered in San Jose, California. They are a global company; found almost everywhere online payments are used.
Their services are offered to consumers as well as vendors, auction sites. Paypal charges a fee for the transactions made. They have acquired many companies in many countries as their chosen mode of entry so as to offer payment solutions. As a result, Paypal has made online payments incredibly popular with users everywhere.
The SWOT analysis will enable us to understand how PayPal became one of the biggest e-banking solutions on the planet. Most of you might already be familiar with the SWOT template but in case you don’t know, it is an acronym for strengths, weaknesses, opportunities, and threats.
The first two factors of the SWOT are called internal factors whereas the latter two are called external factors. The reason why strengths and weaknesses are called internal factors is that they can be controlled by the entity being analyzed in the SWOT which in this case is a company. These factors can be influenced and honed or mitigated internally.
Threats and opportunities on the other hand are out of the influential sphere of the company because of the fact that they occur on their own, unannounced and even unanticipated at times. The company cannot change these factors in any way. Let’s try to understand this using an example.
The fact that PayPal is a global company tells us this is a strength because it was up to the creators to make this possible by utilizing their resources effectively. So we can say this is an internal factor for the company. On the other hand, if they have many emerging competitors in the market, this would be a threat.
We call it a threat and not a weakness because they cannot control their competitors. They have no say in the number of competitors that emerge and give them a tough time. So this here is an external factor.
Now that we have some sort of a basic understanding of SWOT, let’s move on ahead and see how it applies to PayPal.
Paypal's Strengths
PayPal is an interesting company to talk about with reference to a SWOT-based example because of the reach they have; they are found in all major countries in the world. It is not possible to talk about all things which help PayPal in standing out, but we will see the biggest strengths.
Global Presence
It is always a huge asset for a company to have an extensive reach, let alone global. PayPal is the kind of business that does not have many barriers to cross in order to spread. At the moment they can be found and used in about 200 countries and regions around the globe.
Their strategic expansion into other countries is made possible through mergers and acquisitions. E.g. in China, they have a strategic partnership with Baidu to be able to do business in the country.
In India, PayPal is doing amazing things. Not only are they available for use in the country, but they also have one of the biggest global engineering teams, just second to the ones in the USA.
Although they aren’t officially present in Pakistan, they own a company called Xoom over there which has made the service accessible.
Customer Base
Naturally owing to the global presence of the company, they have an excellent customer base. As of the previous year of 2021, they had a whopping 392 million active users!
That is a very impressive number to have and surely it will grow at an exponential rate owing to the vast popularity of this industry.
User-Friendly
Although easily taken for granted, businesses that actually offer easy-to-use and easy-to-understand products and services are so much better than the rest.
PayPal is extremely easy to use for everyone as long as they have basic tech literacy. This is a strength for the company because it is very easy to acquire customers.
Setting up an account is extremely easy as well. This doesn’t mean that the interface is easy to replicate; competitors do not have the kind of resources to just copy PayPal.
Innovative
PayPal is a very innovative company not only in terms of the solutions that they offer but also if you look at their business history.
They have worked on changing and perfecting their business model over the years in order to reach the place they have now in the world.
Brand Equity
Every time one thinks of making an online payment, in terms of either buying something or sending/receiving money from someone, PayPal instantly comes to mind.
This is why it is so impressive that the company has been able to make such a big brand name for itself.
Paypal's Weaknesses
This is often the factor in the SWOT analysis framework which scares a lot of people. Naturally, it is a negative factor so people are intimidated by weaknesses. They can always be mitigated. Let’s see which weaknesses are currently affecting PayPal.
Frauds
PayPal has suffered many cyber-attacks which have obviously left a stain on their reputation. Their security isn’t as strong as it should be for an e-banking platform.
This matter should be dealt with in a timely fashion before things get way out of control for the company and they lose followers.
Fee Amount
Because PayPal enjoys a good chunk of the market share, they use it to their advantage in terms of the transaction fee they charge.
Yes, every service or product does have some way of charging consumers but this can be a weakness because although most people don’t mind paying to PayPal, many find it too expensive.
There are other alternatives in the market, though they might not be as good, they still offer better prices.
Internet Dependence
PayPal is actually used when connected with the internet; otherwise, the money can’t be transferred. This does leave a lot of room for countries or regions where stable internet connections are not always available.
They should have an alternate system of coming up with a payment technique that does not need an internet connection 24/7. They could instead learn to invest in some appropriate infrastructure for regions that have limited internet access.
Paypal's Opportunities
PayPal is a revolutionary concept in an industry that is still growing and has plenty of room for innovation. The opportunities can be endless here. But because it will take very long to discuss it all, let’s see the most exciting ones for the company.
International Expansion
Though already in 200 countries around the world, they still have a lot of regions that are untapped by their business. International expansion is definitely the way to go because it offers more business growth.
Technology
With being in a highly dynamic tech field of work, PayPal has a huge responsibility to be ready for any technological revolutions to explore.
They already have a huge advantage in terms of their technological scope, they can further hone this advantage to become tech innovators of the future. This industry of e-banking is fairly young, they still can learn a lot more.
Cryptocurrency
PayPal should be open to incorporating the transfer of cryptocurrency on its platform. Crypto is expected to become a huge deal in the near future. Everything has become digital, it is only so long until the currency becomes digital as well.
This is a very interesting space for the company to explore and work towards. They could in fact be the pioneers in this domain of allowing digital trade of crypto.
Paypal's Threats
PayPal like any other business is subject to threats. While learning how to conduct SWOT analysis, it is very important to clearly identify all the relevant threats which can be avoided to help the business. Here are the things that PayPal should be wary of.
Competition
Although this company is way ahead in the game, they still have competitors. Competitors no matter how small can always become stronger with time.
Google Wallet, WePay, Apple Pay, Wise, Payoneer, etc. are just some of the more known examples. If not careful, any of them can overtake PayPal. Google and Apple even have the kind of resources that can easily overtake the market share.
Young Industry
A young industry provides many opportunities for companies to grow and to expand, but this opportunity isn’t exclusive; anyone can enter and do well with the right resources.
The barriers to entry in this industry aren’t very high because the trend for online banking is still developing in many areas. Local and specialized competitors in various regions may eradicate any need for PayPal’s services.
Political Instability
Many regions in the world are still not using PayPal because of the political tensions that exist between the world’s nations.
China and the USA are always in some sort of political fit. Business between the two countries is very difficult as is. It could only be a matter of time before another political issue strikes up and PayPal has to get out of China.
Cyber attacks
PayPal can only continue to be successful when people feel safe using it by giving sensitive information crucial for the banking process.
They must come up with a stable solution to get rid of these cyber security issues once and for all.
PayPal SWOT Analysis: Final Thoughts
Having read your way through the article, you can now truly appreciate what sort of a company PayPal is. In this analysis, we have identified and applied all of the four broad factors to the company.
We have seen that the strengths this brand has far outweigh all of its current troubles. They are the market leaders and they have millions upon millions of customers and this number continues to increase every day.
The opportunities they have can eradicate a few of the weaknesses as well. the weaknesses are not very serious to begin with, however, they should be mindful of security concerns.
The threats on the other hand should be removed as soon as possible. Obviously, they cannot be eliminated but PayPal can come up with strategies to mitigate the harmful effect of each threat, the most persistent being the cyber security issues. All in all, it is very safe to conclude that PayPal is truly a remarkable business with a very bright future in this industry. We cannot wait to see where they go next but here’s what is known for sure; we have not seen the last of PayPal.
