Paypal – A Brief History of PayPal | Fintech Zoom
When it comes to fintech, few companies can rival PayPal, either in terms of revenue or global reach. Today, PayPal spans the world, operating in over 200 countries and using more than 25 currencies.
It has over 305 million users and last year processed revenues of $17.77bn, leading to a profit of $2.459bn. Not bad for a company that was once described as one of the ‘top ten worst business ideas’!
How it all started
It was four young entrepreneurs, Ken Howery, Max Levchin, Luke Nosek, and Peter Thiel, who first came up with the idea of processing transactions safely online for customers and businesses back in 1998.
In 2000, their fledgling company, Conformity, then joined forces with X.com, the brainchild of Elon Musk, to create the PayPal we know today.
The new venture was an instant success, adding 5 million new users in its first few months. It was launched on New York’s NASDAQ technology stock exchange in 2002 and grew an unprecedented 55% in its first year.
From its humble beginnings, PayPal has risen to be the go-to payment method for everything from eBay purchases to internet retail to online slots companies such as Unibet. Unibet. As we move ever closer to a cashless society, the ease and security of PayPal only become more attractive, cementing its place at the very heart of fintech.
This is just one of the reasons why we have chosen PayPal as one of our prime three fintech stocks to purchase in 2021, and most in the industry would argue with this assessment. Once derided by so-called experts, PayPal has turned out to be not such a bad business idea after all.
PayPal and eBay changing the face of e-commerce
PayPal is perhaps best known for its collaboration with eBay, the online auction site. eBay purchased the company in late 2002 for $1.5bn – just two years after it had attracted its damning top ten worst ideas listing.
PayPal was subsequently spun off from eBay in 2015, returning to the stock market with a valuation of $49bn. At the time, this was far more than its former parent company was worth. Within a few short months, its value had risen by another 16%, handsomely rewarding investors in the new, separate company.
With profits rising and money to spend, PayPal embarked on a voracious buying spree, swallowing up similar fintech companies such as Verisign, Venmo, and Paydiant. This worked for them in two ways: increasing their global reach, while eliminating potential rivals from the money handling marketplace.
With the latest available figures showing an annual rise in PayPal profits of 15% year on year, many people continue to benefit from the company’s incredible growth. But as much as the shareholders make from PayPal, no one will ever match the fortunes of Pennsylvania PR Exec, Chris Reynolds.
In 2012, Reynolds logged on to find that PayPal had credited his account with $92quadrillion – that’s 92 followed by fifteen zeros – enough to make even Elon Musk’s eyes water. Since his windfall amounted to over a thousand times all the money in the world put together, he sadly could not withdraw it before PayPal realized their mistake and took the money back.