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PayPal: A case study


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Made for the unit Internet Commerce and Consumers, looking at the growth and innovation of online commerce with a particular emphasis on PayPal. View on YouTube for voiceover:

Published in: Internet
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PayPal: A case study

  1. 1. (PayPalInc.2015)
  2. 2. Analyse the degree to which internet business has matured and/or is constantly developing and innovating using a detailed study of an internet business
  3. 3. Jayllee Carter – 14825909 Kimberly Teo – 17053091 Kristina Stonehouse – 15504034
  4. 4. THESIS STATEMENT Internet business is continually developing and growing. The main source of growth and development is innovation: PayPal is one example of a company focussed on keeping up with development and growth via innovation.
  5. 5. AGENDA Introduce the Web & E-commerce Provide E-commerce development Overview Understand the development of the Internet though a detailed case study of PayPal.  Revolution of PayPal  Current developments & innovations  PayPal Competitors
  6. 6. THE INTERNET The internet is “a computer network comprising or connecting a number of smaller networks, such as two or more local area networks connected by a shared communications protocol” (Oxford Dictionary, 2015). (Social News Daily, 2015)
  7. 7. WWW The World Wide Web (WWW) was created by Tim Berners-Lee in 1990 as an application which utilises the Internet to serve a purpose (Berners- Lee, 1999). The Web was the juice the internet needed to kick start the innovation and development of the internet. (SocialNewsDaily,2015)
  8. 8. E-COMMERCE E-commerce is “a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet. Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business.” (Investopedia, 2015). (E-Consultancy, 2011).
  9. 9. POTENTIAL CHANGE E-commerce has changed  Accessibility; Broken down physical barriers.  Security; political and legal legislation  Innovation; New business opportunities  Communication/Timeliness; Instant global communication (Nickson, 2012)
  10. 10. PREDICTION  REALITY Wired Magazine in July 1997 stated “We have entered a period of sustained growth that could eventually double the world’s economy every dozen years and bring increasing prosperity for – quite literally – billions of people on the planet. We are riding the early waves of a 25-year run of a greatly expanding economy that will do much to solve seemingly intractable problems like poverty and to ease tensions throughout the world” (Ryan, 2010). Do you agree?
  11. 11. CASE STUDY (Image: PayPal Inc. 2015)
  12. 12. ESTABLISHMENT The six founding members Image: Max Levchin Elon Musk, founder of Image: Time Magazine Founded in 1998 as Confinity, the company merged with Elon Musk’s to later be known as PayPal in 2001.
  13. 13. IPO Going public in 2002, PayPal generated $61 million in revenue (Regan, 2002). Shortly after, eBay acquired PayPal for $1.5 billion (Kane, 2002). IPO day festivities Image: David Sacks/PayPal
  14. 14. ACQUISITIONS AND PARTNERSHIPS 2005 Image: PayPal 2008 Image: TechCrunch 2013 Image: Forbes
  15. 15. EBAY DEPARTURE In 2014, eBay announced it would spin-off in to a separate publicly traded company (Cheng, 2014) and its move from PayPal was completed in July 2015. Image: Reuters Image: Fortune Image: New York Times
  16. 16. TODAY Located in San Jose, California Operations:  203 markets  159 active accounts  26 currencies (PayPal Inc., 2015)
  17. 17. PayPal Accessibility & Flexibility Safety & Security Payments Integration How has PayPal revolutionised Internet business?
  18. 18. ACCESSIBILITY & FLEXIBILITY PayPal establishes a relationship with both buyer and seller PayPal enabled peer-to-peer online transactions by opening its platform, codes and infrastructure to other services (Rupley, 2009) One of the first payments system to launch an app for iOs and Android (PayPal Credit, 2015) Image: PayPal
  19. 19. SAFETY & SECURITY Introduction of Secure Sockets Layer (SSL) technology for data encryption PayPal’s Seller and Buyer Protection Policy Extra online security through use of self-developed and patent pending method of verification (MarketLine, 2013, p.7)
  20. 20. PAYMENTS INTEGRATION PayPal offers consumers the means to incorporate PayPal functionality into their applications with their application programming interfaces (API) The advantages are (Payment Online Corporation, 2009):  Process one-time and recurring payments without the need to invest in expensive security infrastructures or expensive audits  Maintain card and bank account payment schedules without the liability of warehousing payment data  Safeguard against un-authorized system access through multi-factor user authentication  Centralize payment related activities through Payment Vision administrative site  Prevent fraud and returns through ValidPay
  21. 21. INNOVATION “If you are trying to do something new, there is no evidence of historical success or failure that might provide you with sufficient guidance to make an informed decision”(Cohan, 2013).
  22. 22. PAYPAL AND INNOVATION Taking something existing and bringing it to the masses Taking something existing and fixing problems with it Taking something old and reinventing it
  23. 23. PAYPAL.ME Peer to Peer (p2p) payments using a unique URL P2P is not a new concept, and using it to send payment isn’t either – it’s not even new for PayPal Capitalising on ‘everyone’ having internet access Taking something existing and ‘fixing’it – making it simpler (Image: Magdurulan 2015)
  24. 24. INNOVATION THROUGH PARTNERSHIPS PayPal drive a lot of their growth and ability to innovate through strategic partnerships, mergers and acquisitions eBay – PayPal as their growth driver Discover Financial Services (US)  Payment cards POS systems (Home Depot, Abercrombie & Fitch) Third Party developers Improved mobile app. Local Partnerships – CoOp in Australia } Offline Focus
  25. 25. CURRENT STANDING “Innovation in the sector is speeding up and PayPal faces new competitors and a need to stay at the edge of new hardware and software developments.”(Mishkin 2014) Growth Strategy - Centre of next innovation - Digital and physical commerce - Digital wallet  Mobile wallet  No wallet - Re-imagined consumer shopping experience (Gordon 2014)
  26. 26. COMPETITION? Market share – 91% Apple Pay? - Within the Apple system Stripe - Integrated by 3,558 new websites in 2015 - PayPal lost 2,150 websites in the same period - Improved technology? (Photo: Maruti Techlabs 2015)
  27. 27. CONCERNS These websites are prevalent Customer service is an area PayPal could definitely improve on – in 2015 people expect it Balance between security and freezing accounts arbitrarily
  28. 28. CONCLUSION Wide range of growth and development Certainly innovating in their field, and expanding beyond it Is back to basics the next approach?
  29. 29. THANKS FOR WATCHING! Feel free to leave us a comment down below
  30. 30. REFERENCES Auchard, E. (2007). PayPal offers secure way to shop non-PayPal sites. Reuters. Retrieved from idUSN1840572920071119 Australian Treasury. (2012). Australian Small Business Key Statistics and Analysis:Chapter 11. alian%2520Small%2520Business%2520- %2520Key%2520Statistics%2520and%2520Analysis%2Fdownloads%2FRTF%2FAustralianSmallBusinessKeyStatisticsAndAnalysis.ashx&usg= AFQjCNGnnjbRCl6g6sgASFNKXTz9GjnXrA&sig2=_kz0qAH2tFKDOzmaLQbvaA&bvm=bv.103073922,d.dGo Berners-Lee, Tim, Weaving the Web: The Past, Present and Future of the World Wide Web by its Inventor (London, 1999 Cheng, R. (2014). eBay, PayPal to split into separate companies in 2015 - CNET. CNET. Retrieved 28 September 2015, from company-in-2015/ Chu, L. (2008). What PayPal does with your money. Retrieved 28 September 2015, from Cohan, P. S. (2013, September 5). What PayPal's Rocky Beginnings Can Teach You About Startup Success. Retrieved from E-Consultancy. (2011). 10 amazing e-commerce infographics Forrest, C. (2015). How the 'PayPal Mafia' redefined success in Silicon Valley. TechRepublic. Retrieved from valley/ Gordon, L. (2014, August 21). The Four Aspects of PayPal's Current Growth Strategy. Retrieved from Euromonitor International:
  31. 31. Ha, P. (2008). eBay Acquires Fraud Sciences For $169 Million. TechCrunch. Retrieved 28 September 2015, from Heggestuen, J. (2015, June 16). THE PEER-TO-PEER PAYMENTS EXPLAINER: Why tech companies and banks are offering a service that doesn't make money. Retrieved from Business Insider Australia: 2015 History of PayPal Inc. (2004). Nternational Directory Of Company Histories, 58. Retrieved from histories/paypal-inc-history/ Hoffman, M. (2008). EBay Buys Bill Me Later for Nearly $1 Billion. Retrieved 28 September 2015, from Investopedia. (2015). Electronic Commerce – ecommerce. Kane, M. (2002). eBay picks up PayPal for $1.5 billion - CNET. CNET. Retrieved 27 September 2015, from picks-up-paypal-for-1-5-billion/ Kerner, S. (2005). EBay Buys VeriSign's Payment Gateway Unit - InternetNews.. Retrieved 27 September 2015, from news/article.php/3555201 Krishnan, R., Smith, M. D., & Telang, R. (2002). The Economics of Peer to Peer Networks. H. John Heinz III School of Public Policy and Management. Ludwig, S. (2013). PayPal buys young startup Iron Pearl to help it acquire more users. VentureBeat. Retrieved 28 September 2015, from Macsai, D. (2011, March 14). THE 10 MOST INNOVATIVE COMPANIES IN FINANCE. Retrieved from Fast Company: Magdurulan, D. (2015). Peer to Peer Networking Diagram. Retrieved from MarketLine,. (2013). PayPal: Online payments tycoon (pp. 1-16). London: MarketLine. Mishkin, S. (2014, September 30). Innovation key to PayPal’s successful independence. Retrieved from Financial Times:
  32. 32. Nickson, C. (2012, April 17). The internet as a global marketplace. Retrieved from marketplace.html Oxford University Press. (2015). "Internet, n.". OED Online. PayPalAustralia. (2012, August 14). Co-op enlists PayPal to help Australian students beat the queues this semester. Retrieved from PayPal: paypal-to-help-australian-+&cd=5&hl=en&ct=clnk&gl=au PayPal. (2015). Logo. Retrieved from Payment Online Corporation,. (2009). Payment Gateway software. Payment Online Corporation. Retrieved 28 September 2015, from PayPal Credit,. (2015). PayPal Credit. Retrieved 28 September 2015, from PayPal Developer,. (2015). Retrieved 28 September 2015, from PayPal Inc.,. (2015). Home. PayPal About. Retrieved 27 September 2015, from https://about.paypal- Perez, S. (2015, September 1). PayPal Launches PayPal.Me, A Simpler Way To Request Money Using Your Own Personalized URL. Retrieved from TechCrunch: url/#.zb4yal:vMrN Rao, L. (2015, September 1). PayPal makes money transfers more personal. Retrieved from Fortune: payments-mobile/ Rao, L., Perez, S., & Lunden, I. (2013). EBay’s PayPal Acquires Payments Gateway Braintree For $800M In Cash. TechCrunch. Retrieved 28 September 2015, from cash/ Regan, K. (2002). PayPal IPO off to spectacular start. E-Commerce Times. Retrieved from Reserve Bank of Australia,. (2011). Strategic Review Innovation. Retrieved 28 September 2015, from system/reforms/strategic-review- innovation/submissions/201106-strategic-review-innovation/paypal.pdf Rubin, B. F. (2015, July 20). Now independent, PayPal worth nearly $50 billion. Retrieved from Cnet: paypal-worth-nearly-50-billion/
  33. 33. Rupley, S. (2009). PayPal's (Partially) Open Platform to Usher in New Payment Models & Apps. Gigaom. Retrieved 28 September 2015, from platform-to-usher-in-new-payment-models-apps/ Ryan, J. (2010). History of the Internet and the Digital Future. London, GBR: Reaktion Books. Retrieved from Social News Daily. (2015) The Internet Then And Now [Infographic]. Team, T. (2013, March 4). Here Are Some Factors Driving PayPal's Rich Growth Prospects. Retrieved from Forbes/Investing: Techlabs, M. (2015, May 1). Why Stripe can emerge as the Market Leader in Payment Gateways. Retrieved from Maruti Techlabs: The history of online shopping in nutshell. (2010, March 26). Retrieved from nutshell/ Williams, D. (2007). Pro PayPal E-Commerce. Berkeley, CA: Apress.