Anyone who has looked to buy anything online must be familiar with the world’s most popular payment gateway, PayPal. The company was founded in January 2015 and is headquartered in San Jose, CA, right at the heart of Silicon Valley. It was the first significant payment gateway on the internet and was able to capture a vast market, owing to its selling point. They focused their attention on making the service quick, safe, and secure for all its users since this was the advent of online payments, and people were understandably skeptical about the whole process.
PayPal grew quickly and is now currently one of the biggest, most recognizable brands in the world. They rank 77th on the amount of traffic they get on their website, which does not take into account the umpteen number of websites that use their web plugin to power their online sales.
Here we will take a look into some of the most surprising facts and numbers about PayPal, followed by looking at the business side of the whole company.
The payments made with PayPal are instantly credited into the PayPal wallet of the receiver. So, let’s make like these quick payments and quickly look at some interesting facts about the most famous payment gateway online.
- PayPal was voted one of the worst business ideas of 1999
- The number of transactions processed by PayPal in 2019 was 12.4 billion
- PayPal is available for use with 26 currencies and over 100 countries
- If PayPal was a bank, it would be the 21 largest bank in the United States of America
- The total amount processed by PayPal in 2019 was 711.36 billion dollars
Before we get into the nitty-gritty of the numbers behind PayPal, let’s take a look into some of the fun little facts about the payment gateway that you may not have known. We will try to skirt the commonly known things and try to find obscure details about PayPal.
1. PayPal’s background engineering was created by Elon Musk:
Elon Musk is most famously known for are his two high profile companies, Tesla and SpaceX. However, these weren’t the first companies he founded. The first-ever proper company Elon Musk created was simply called X.com. This was a payment gateway that allowed people to directly transfer money to another individual on the platform, without going through any banks in between. He teamed up with another company hosted at Confinity, which used an algorithm to ratify a transaction with any financial institution. This merger is where PayPal was born.
2. Elon Musk had to borrow money for paying his rent after the sale of PayPal:
It might seem stupid, but Elon Musk, who got nearly 180 million dollars from the sale, had to borrow money to pay his rent after he ended up spending all of the money. However, he didn’t just spend the money on himself and getting a fancy house or car, he used the money to start his other three companies, SpaceX, Tesla, and SolarCity.
3. People are 54% more likely to make an online purchase when there is the option to pay via PayPal:
Owing to PayPal’s long history on the internet, and nearly no security breaches and concerns like other payment gateways, it is very highly trusted in the e-commerce industry. In fact, it has been shown that there is a 54% increased chance of a buyer making a purchase if there is the option of paying via PayPal. The other side of this fact is that 59% of all buyers end up rejecting a sale if they can’t pay by PayPal.
4. PayPal accidentally credited more than 92 quadrillion dollars to Chris Reynolds:
The PayPal wallet is where all the daily transactions that a PayPal account takes in are stored before being transferred into the user’s accounts. Hence it is imperative to keep an accurate track of the wallet and the money that filters through it. A man from Pennsylvania, Chris Reynold, was doing precisely that when he noticed a suspicious charge on his PayPal wallet. The wallet was holding 92,233,720,368,547,800 dollars, which is 92 quadrillion dollars and some spare change. PayPal owned up to their mistake and agreed to pay 9200 dollars to the charity of Chris’s choice.
5. PayPal was voted one of the worst business ideas of 1999:
Every year newest business ideas are taken, and their scope of success is calculated, after which they are rated from best to worst. On this scale, PayPal was voted to be one of the worst business ideas in the year of its inception, 1999. Fast forward 20 years, and right now, it is a multi-billion dollar company, with each of its founders having learned hundreds of million dollars from it.
(Source: 60 minutes)
6. Chad Hurley, one of the founders of YouTube, helped design the original PayPal logo:
Chad Hurley is widely known as being one of three co-founders of the popular video-sharing site that you may have heard of, YouTube. However, before Chad went on to create a cultural touchstone, he was a senior employee at PayPal. In fact, he was the lead designer of both PayPal’s old and new logo. That’s a fun connection between two of the most prominent applications on the internet right now.
(Source: The Guardian)
7. PayPal lost millions of dollars in the first year of their operation due to their referral programs:
PayPal’s current referral program gives every new user $5 when they sign up with a referral code and then a further $5 for every one of their friends that use their referral code. However, in it’s first few years, PayPal’s referral program gave $20 for every use of the referral codes. This program cost them an estimated 14 million dollars in loss in their first year itself, though their userbase saw immense growth because of this program, and it has paid for itself many times over.
8. PayPal has a small business loans division that gives out small loans to growing businesses:
PayPal might not be an actual bank, but it does have a small business loan division. This division helps small business owners get off of their feet and grow their size. These loans typically have a lower rate of interest than traditional banks, and hence are very highly regarded in the small business community.
(Source: Business Insider)
PayPal is used daily by millions of people for purchases worth billions. Here we will look at the number of people that are using the website for their payment needs, and how the gateway caters to them all. Before we start, did you know that PayPal was bought by eBay when they IPOed in 2002? This led to a massive boost in PayPal’s userbase since eBay was already a well-established name in the internet community.
9. The number of transactions processed by PayPal in 2019 was 12.4 billion:
PayPal is currently accepted at over 87.5% of all online retailers, with nearly 98% of all freelancers using it as their primary mode of payment, it is no surprise then that the volume of the transaction is processed via PayPal is in the billions. 12.4 billion in 2019 to be very exact.
10. The number of daily transactions processed by PayPal is 33.97 million:
Since e-commerce websites are active over the entire world, at all times, and since there are freelancers working across the globe at all times, PayPal sees traffic every second of the day. These transactions, on average, total to 33.97 million every single day.
11. 58% of all Americans use PayPal, which make up 14% of all online payments across the United States:
PayPal’s strongest userbase is in the United States, where almost 58% of American adults use the service for their online payment needs. These individuals make up nearly 14% of all the online transactions that take place online in the United States, with it being the second most significant percentage of transactions. The most significant portion is the Bank of America, which is the largest bank in America.
12. Users must keep in mind that it is impossible to delete one’s PayPal history without deleting the entire account:
An individual’s PayPal history can be very revealing and personal, given that it would contain details about all the online purchases that they have made. Considering this fact, it may be prudent to know the fact that it is currently impossible to delete the history of transactions from a PayPal account. The only way to erase this history is to delete one’s entire PayPal account.
(Source: Business Insider)
13. PayPal grew its mobile payments market by 52% in just the first quarter of 2019:
The global mobile payments market has been growing rapidly, seeing explosive growth in both developed and developing markets. PayPal has been the front runner for the push for mobile payments in the western world. In fact, the mobile payment version of PayPal grew by 52% in just the first quarter of 2019.
14. PayPal’s small loans division paid out more than 650,000 loans to more than 225,000 unique sellers:
A lot of businesses require the kind of small short term loans that PayPal offers, either for financial management or for working capital. This is evident from the fact that nearly 225,000 unique sellers have taken more than 650,000 loans from PayPal’s small loans service. These loans total up to a volume of more than 10 billion dollars.
(Source: Business Insider)
15. PayPal is available for use with 26 currencies and over 100 countries:
PayPal is accepted across the world, in over 100 countries. These countries use 26 supported currencies, which consist of all the major currencies of the world. The countries whose currencies aren’t supported by PayPal can default to use the US dollar or any other currency that they need to use for the payment online. The good thing about PayPal is that it is approved for use by the federal reserve of all countries it operates in, so transforming one currency to another is not an issue for PayPal.
Now that we have looked at the various facts related to the usage of PayPal, and the users that have built the platform up, it is time to look at the business that PayPal does, and the capital it raises for a variety of purposes.
16. PayPal’s current market cap is 125.8 billion dollars:
The market cap refers to the total valuation of a company, which is calculated by multiplying the total cost of a share of the company with the total number of stocks in circulation. After PayPal’s IPO in 2002, its valuation was around 1.5 billion dollars, which was the cost of its acquisition by eBay.
17. If PayPal was a bank, it would be the 21st largest bank in the United States of America:
While PayPal might not be a bank in the traditional sense, it does do a lot of things a bank does. Ratifying and enabling transactions, allowing for investments and even for steady payments over any period of time. However, if PayPal was an actual bank, the number of its user accounts would make it the 21st largest bank in the US.
(Source: Business Insider)
18. PayPal earned $17.77 billion in revenue in 2019, up 17% from 2018:
PayPal takes a small cut from business transactions that are made on the platform, usually around 1% – 2% of the total value. This is the primary source of revenue for the company, though it also has multiple other revenue streams, like investments into financial institutions. PayPal earned nearly 17.77 billion dollars in revenue in the year 2019, which was 17% more than the income they earned in 2018.
19. The total amount processed by PayPal in 2019 was 711.36 billion dollars:
As we have seen, PayPal processes a large number of transactions every single day. These transactions, big and small, add up quickly, and in 2019 was equal to nearly 711.36 billion dollars. For comparison, this is more than six times the total personal wealth of the richest man on Earth, Jeff Bezos. The amount that gets transacted every single year could fund nearly every African nation’s food distribution programs.
20. In eBay’s last year of owning PayPal, 45% of all revenue on eBay was generated via PayPal:
As we discussed previously, eBay was the owner of PayPal until the year 2014, for the first 15 years of its lifetime. By the time that eBay split PayPal up to be its own company, nearly 45% of transactions on eBay were generated via PayPal. Even after PayPal and eBay split up, it counted for almost 40% of all transactions, slightly lower since eBay stopped putting it over all other payment platforms.
(Source: Macro Trends)
21. An average of 22,557 dollars are transacted on PayPal every second:
With the amount that gets transacted on PayPal every single second, one can buy a Honda Civic or a private island for at least one week, or even invest it into a fledgling new company as an angel investor and turn it into millions. The fascinating aspect of this money is that this amount was just 7000 dollars in 2014 when PayPal became an independent company.
22. The average PayPal user has 485 dollars in their accounts, compared to only 196 dollars in cash:
As we have seen, PayPal has hundreds of millions of users, with tens of millions of them using the gateway on a regular basis. These people have around 485 dollars in their accounts on an average, as compared to $1209 on their Venmo account. This is more than twice the amount that the average American carries out in cash in their wallet on a daily basis.
23. PayPal was the first payments giant to drop Facebook’s cryptocurrency Libra:
Libra is the cryptocurrency that the social media giant Facebook is currently working on developing. The currency got a lot of attention from the various financial institutes and government organizations, many of whom even pledged $10 million for the initial coin IPO to inject value into the stable coin. However, after Facebook’s constant battle for securing it’s users data and losing, many of these institutions have backed off from their commitments, with PayPal being the first organization to do so.
24. PayPal went public in 2002, and grew its stock by 55% on NASDAQ in the first year:
PayPal’s public IPO was very highly hyped and anticipated by everyone in the financial world. It was going to be one of the first companies of the dot com bubble to go public, and the enthusiasm for its release was seen in the number of investors it drew in their first year itself. The growth seen in the stock on NASDAQ was nearly 55% in the first year itself, which is among the highest increases seen in IPOs across the years.
25. PayPal’s small loans division has paid more than $10 billion in its lifetime:
The small loans division of PayPal is one of the most profitable endeavors of the company, with the volume of loans it has given out through its lifetime exceeding 10 billion dollars in 2018. These loans earn nearly 23% of all of PayPal’s revenue.
(Source: Business Insider)
26. On average, PayPal pays out around $50,000 per every small loan:
The average loan given by banks in the US, according to the US Small Business Administration (SBA), is $420,000, which is more than 8 times the size of the average loan given by PayPal. This makes PayPal the primary choice for small businesses that are only looking to get relatively smaller loans to just boost their business a little bit and are not looking for aggressive expansion.
(Source: Business Insider)