Paypal

Presented to:
Stuart David Lustman

Presented by:
Catalina Galvis Vargas (90170)

St. Bonaventure University

Faculty of Economic Sciences
Marketing and International Business
Cali - Colombia
2023
 1. Describe their primary business of payment processing.

PayPal's primary service is payment processing. PayPal is a popular payment processing

provider for small businesses and e-commerce companies. Its main purpose is to make it
easy for individuals and businesses to send and receive cryptocurrencies through online
transactions. PayPal offers a variety of payment methods, including peer-to-peer payment
systems, digital wallets, and payment gateways. Customers can make fast and secure online
payments by linking their bank account, credit card or debit card to their PayPal account.
PayPal is one of the largest companies in the market, as its payment processing services are
widely used by individuals and businesses around the world.

To make payments online, you may utilize your PayPal balance as a virtual wallet. The
following payment options are available to you if you wish to electronically top off your
PayPal balance:

 Bank statements
 Cards that are prepaid
 (U.S. only) Retail Cash

The main activities of PayPal are the issuance of electronic money and the provision of
payment services using that money.

2. Tell me who their customers are. Who do they target? What segment of the
market are they in? You cannot just tell me e-commerce companies as that
information is here in this document already. Give details.

The Target Market and Customer Base of PayPal

PayPal caters to a wide spectrum of clients, including e-commerce firms, small enterprises,
and private citizens. PayPal does have a substantial concentration on e-commerce
businesses, but they also serve a larger market area. The following particulars pertain to
PayPal's target market and client base:
  Individual Customers: PayPal provides its services to individuals who utilize the
network for a range of activities, including maintaining their digital wallets, sending
money to friends and family, and making purchases online. PayPal offers safe
payment methods and an easy-to-use interface to improve people's online buying
experiences.
 PayPal focuses on Small and Medium-sized Enterprises (SMEs): who need
payment processing solutions for their internet enterprises. Retailers, service
providers, independent contractors, and other small enterprises who require a
dependable and user-friendly method of receiving payments from clients via various
channels, such as marketplaces, mobile applications, and websites, might be among
them.
 Online Marketplaces: PayPal works with online marketplaces like Shopify and
eBay to give its vendors and customers safe payment choices. Through the
integration of PayPal's payment processing capabilities, these marketplaces
facilitate secure and simple transactions for its consumers.

Paypal is a business that entered the banking industry, which is a very difficult industry
to run. Fortunately, Paypal was successful in this field and is now a valuable resource
for many businesses throughout the globe. With a 54% market share in the payment
gateway industry today, Paypal's direct connections to all sizes of sales portals account
for the majority of this increase.

3. What prices do they charge?

PayPal levies varying fees for various services and transaction kinds. Various factors,
including the user's account type (merchant or consumer), the transaction type, currency,
and country, might affect the costs. The following are some important details about
PayPal's fees:

 Transaction Fees: PayPal levies transaction fees, particularly for businesses, in

order to receive payments. Depending on the particular transaction, the fees could
be a fixed sum or a % of the total transaction. Depending on the user's location and
the currency being used, the precise costs may change.
  Withdrawal costs: When money is taken out of a PayPal account and transferred to
a bank account or credit card, PayPal may impose costs. Depending on the user's
location and the withdrawal method, different fees may apply.

(PayPal Fees Explained—What you’ll pay and how to save – Talus Pay, s. f.)

 Dispute costs: When a buyer submits a chargeback or dispute claim for a

transaction, PayPal may in some circumstances levy dispute costs. The user's
location and the original transaction currency may have an impact on the costs.

(PayPal Fees Explained—What you’ll pay and how to save – Talus Pay, s. f.)

It's crucial to remember that PayPal's precise costs are subject to change at any time,
and that extra fees or exclusions can apply based on the type of account the user has, the
number of transactions, and other variables.

4. Compare their prices with 3 competitors for this service

Razorpay is a cloud-based payment processing software that facilitates vendor payments,

payment gateways, and subscription options to assist medium-sized and big organizations
in managing their money. It allows businesses to automatically pay staff and vendors as
well as receive payments from clients in a number of ways. The one-stop shop for creating
a compelling web presence is Squarespace. With our award-winning templates, you can
seem professional from the start when creating a website, online store, or portfolio. As we
can see below, we ranked the organizations based on the attributes that the gettapp website
offered. The qualities that should be emphasized are quality an pricing.
The prices offered by these three brands depend on the features they offer, it is worth
mentioning that paypal does not charge for its services but its key competitor on this map
does, the second company that was analyzed and which does not have the same features or
score, is also free to use. while Bill Charges twice as fast with Bill.com. Accepts flat-rate
ACH payments and sends recurring e-bills and automatic payment reminders.

5. What is their Pricing Strategy based on this information and other information
you find out about the payment processing (also called merchant processing)
industry. Show me examples and explain why

PayPal's pricing strategy in the payment processing sector is multidimensional, with the
goal of being competitive while also catering to the demands of diverse client groups
and adapting to market changes.

 Tiered Pricing: PayPal frequently uses a tiered pricing approach, in which

merchants are paid varying prices based on their transaction volume or business
type. Smaller firms with lesser transaction volumes, for example, may pay a
little higher fee per transaction, whilst bigger organizations with significant
transaction volumes may receive discounted rates. This allows PayPal to serve a
diverse spectrum of clients.
  Flat Fee and Percentage: PayPal normally charges a flat fee per transaction as
well as a percentage of the transaction value. For example, they may charge a
2.9% fee + $0.30 each transaction. Customers benefit from this price structure
since they know exactly what to expect with each transaction.
 Currency Conversion and Cross-Border Fees: PayPal levies extra costs for
currency conversion and cross-border transactions. This pricing strategy
provides a practical answer for companies involved in international trade while
also acknowledging the additional complexity and possible expenses related to
such operations.
 Seasonal or Promotional Pricing: Similar to a lot of other payment processors,
PayPal periodically runs promotions to draw in new clients or during busy
shopping seasons. For instance, companies can lower processing costs or
provide cashback incentives to businesses who utilize their services over the
holidays when sales are high.

These pricing schemes are implemented for a variety of reasons:

 Competitive Positioning: In a crowded market, PayPal needs to maintain its

competitiveness. They are able to draw in and keep a diverse group of merchants
thanks to their tiered pricing structure and ability to negotiate special prices for
larger customers.
 Cost Recovery: PayPal pays its operating expenses and makes money on each
transaction thanks to the flat charge and percentage system.
 Value-Based Pricing: PayPal can make more money while giving businesses useful
tools by delivering value-added services and charging more for them.
 6. Draw a Product Positioning map between PayPal and these 3 competitors. Based
on this map, where is PayPal’s position? Can they shift their position on the map
to bring in more revenue.

Over the years, PayPal has shown that it is capable of growing and adapting, which has
allowed it to alter its market position and increase income. In order to adapt to its clients'
evolving demands, PayPal is innovating and growing its services as the e-commerce and
online payments industry changes. This involves the launch of fresh functions and offerings
including buyer financing choices, contactless and mobile payments, and mobile payments.
They are able to seize fresh chances for producing income and maintain their
competitiveness thanks to these strategic activities.

7. Using the Google Finance link above, tell me how PayPal’s Revenue and Net
Income have done (better, worse, the same) in the last 3 quarters in a year over
year comparison. You can show me by writing it or making a table (tabla)
The graphs show both quarterly and annual revenues, although there is no specific
information on each month's revenues.

8. If you were advising PayPal, how would you recommend that they grow this
business?

It would be advisable for them to broaden their scope of interest, augment their global
reach, refine merchant onboarding, provide inventive payment options, fortify their
alliances, and allocate resources towards advertising and raising brand recognition.
Through the implementation of these tactics, PayPal may expand its client base, penetrate
new markets, draw in more businesses, maintain an advantage over rivals, boost transaction
volume, and establish credibility and brand awareness within the industry. PayPal can
position itself for sustained development and success in the payment processing sector by
taking a proactive and customer-focused strategy.

9. My paypal company of choice is xoom.

 Describe their primary business of payment processing.

Using the help of PayPal, you may send money to recipients in more than 70 countries
safely and conveniently using Xoom. You may pay foreign bills, top up cell phones, and
make payments to bank accounts with Xoom. It is crucial to remember that Xoom should
only be used for legitimate reasons and to send money to individuals you know, such your
friends and relatives. You can have your access to Xoom suspended if it is discovered that
you are using it for illicit or commercial purposes. The U.S. Federal Government and its
state authorities have registered and regulated PayPal's secure service, Xoom.

 Tell me who their customers are. Who do they target? What segment of the market
are they in? You cannot just tell me e-commerce companies as that information is
here in this document already. Give details.

The main audience for Xoom is anyone who needs to transmit money abroad. Their
clientele is made up of a wide variety of people, such as:

 Expatriates and migrants: Xoom serves those who have moved abroad for
personal, professional, or educational purposes. These clients frequently have
financial responsibilities or need to send money home to support their family.
 Family and Friends: Customers can use Xoom to transfer money to family
members who are residing overseas. This includes those who wish to provide
financial support for their families or who wish to assist friends in need.

Remittance and international money transfer is the market segment in which Xoom
operates. This market sector consists of businesses that offer an alternative to established
practices like banks and money transfer operators by facilitating cross-border money
transfers. Customers may send money swiftly and securely with Xoom's digital platform,
which uses technology to offer an affordable and practical option for international money
transfers.

 What prices do they charge?

The cost of using Xoom to conduct international wire transfers will vary depending on the
sender and recipient locations. Even so, I'm not sure if domestic transactions are free.

 Compare their prices with 3 competitors for this service

Receiving foreign money orders is free of charge for MoneyGram. The sender bears the
direct cost of these expenses. MoneyGram makes it clear that costs for remittances are
subject to change forever and does not disclose how it collects fees in Colombia. According
to Western Union, there is no cost associated with receiving money. The person who sent
the transfer is responsible for paying any associated costs. Depending on the payment type
and the location from which you send, Xoom charges a fee ranging from $2.99 to $3.99
USD.

The amount that must be received determines the charge. You could be charged for the
service if you receive money at an approved agency, even if Xoom doesn't charge a fee for
receiving money.

 What is their Pricing Strategy based on this information and other information you
find out about the payment processing (also called merchant processing) industry.
Show me examples and explain why

The precise price plan of Xoom is not directly disclosed. Nonetheless, since Xoom is a
PayPal subsidiary, we may learn from PayPal's approach to pricing in the payment
processing sector. The main factors influencing PayPal's pricing approach are the amount
of transactions and activity that are handled on their payments network. Various price tiers
and fees are available, based on the amount of transactions handled by businesses. Because
cheaper costs are frequently associated with higher transaction volumes, PayPal encourages
merchants to handle more transactions. PayPal provides a range of price alternatives for
different kinds of transactions, including international, in-person, and online payments.
Depending on the nature of the transaction and the recipient's location, they could impose
various fees or percentages.

 Draw a Product Positioning map between Xoom and these 3 competitors. Based on
this map, where is Xooms position? Can they shift their position on the map to bring
in more revenue.

In the case of Xoom, I believe that it is situated in a decent area, but the pricing does not
really work in their favor. As a result, I would attempt to reduce their costs somewhat in
order to attract more clients.

 If you were advising Xoom, how would you recommend that they grow this business?

If I were giving Xoom business advice, I would suggest concentrating on enhancing the
user experience, increasing the number of transfer choices and destinations, and creating
successful marketing plans. Through this approach, Xoom can expand its user base, win
over new clients, and position itself as a dependable and practical choice for international
money transfers. Furthermore, in order to react swiftly and provide its clients with cutting-
edge solutions, Xoom must keep up with the latest developments and trends in technology
within the payment processing sector. Xoom may establish itself as a market leader and
experience long-term, sustainable growth by combining these techniques in the appropriate
way.
REFERENCES

The 7 best business strategy examples I’ve ever seen. (s. f.).

https://www.cascade.app/blog/the-5-best-business-strategies-ive-ever-seen

PayPal Fees Explained—What you’ll pay and how to save – Talus Pay. (s. f.).

https://taluspay.com/blog/paypal-fees-explained-what-youll-pay-and-how-to-save/

PayPal Fees Explained—What you’ll pay and how to save – Talus Pay. (s. f.).

https://taluspay.com/blog/paypal-fees-explained-what-youll-pay-and-how-to-save/

Fees | Merchant and Business | PayPal US. (s. f.). PayPal.

https://www.paypal.com/us/webapps/mpp/merchant-fees