The PayPal Company’s Competitive Advantages Essay (Critical Writing)

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Competitive Advantages

PayPal was created when the prospects of using the Internet for commerce and sending international bank payments were far from obvious. Nevertheless, the business idea of the payment system turned out to be perfectly realized; it is still actively used, and the demand for its services has grown. An intelligent financial strategy and proper management of benefits and disadvantages guarantee the clients’ influx. One of the main competitive advantages of PayPal is the global scale of the company’s activity. Its clients can make seamless transactions in various markets and networks. The company has a considerable number of supporters, and due to the expansion of services, the number of those wishing to use the assistance of the company grows.

Moreover, the app’s marketing strategy has made the brand recognizable, recommended, and trusted. PayPal offers customized payment solutions through Venmo, ensuring an influx of millennials because of the ease and quality of integration into mobile apps and operating systems. The online payments industry has strong growth prospects in the coming years, and PayPal has a significant competitive advantage due to the popularity of its platforms. The Venmo service is one of the most prominent players in the individual-to-person money transfer segment and is a popular app among millennials. The service includes a social aspect, which distinguishes it from PayPal. Venmo is not currently available outside of the U.S., but if it can be launched in other countries, it could have significant potential to expand its base.

A feature of the apps developed by PayPal is a loyalty system that competitors’ developments do not have. For example, stores can automatically offer discounts to customers through the app, and customers can pay for purchases through the retailer’s app with their card linked to it. With this system, PayPal can gain an advantage over competitors. Correspondingly, the company monitors security and minimizes financial risks. Since PayPal provides payment security through its service or app, the demand for these services will naturally increase. Its management team constantly innovates and introduces new services to attract as many customers as possible. The organization’s ratings continue to point to its high popularity among consumers.

Proper demand stimulation allows the business to stay afloat and steadily increase the reach and number of interested customers. The ability to provide feedback likewise helps to quickly spread the word about the service and its use among the general public. A significant threat to the company is increased competition because other players in the U.S. are actively working on their applications, powerful banks are entering the online payment market, and other countries have established ways to transfer money, including through banks. These factors may hinder PayPal’s goals, but the existing competitive advantages allow the company to hold a leading position in the market.

Competitors

The primary competitor for PayPal may become not only payment sisters but likewise companies from the sales sector, which actively implement the payment function directly through their systems. An example of such a company may be Amazon because back in 2020, the organization announced a new product that will allow affiliate companies to embed a button on their websites, giving customers the opportunity to pay for goods and services through a new service. Thus, when considering the payment methods, the buyer will be able to choose from the most common options: by cards and through PayPal, and likewise from the new service Amazon.

The most significant difficulty for Amazon in entering the electronic payment market will be that third-party online stores may consider Amazon a potential competitor, which may stop them from joining the new payment system. PayPal, on the other hand, is not such a competitor for online retailers. Therefore, even though companies from the sales industry may become potential competitors to the payment service, this does not pose high risks for PayPal.

PayPal and Venmo

PayPal’s use of Venmo is an exceptionally brilliant move of the company’s management team. PayPal, which is very popular with American teenagers, believes that integrating Venmo into the point-of-sale terminals opens up new opportunities for merchants to track consumer feedback on social networks, where they share shopping tips with their friends. The investment in platform architecture makes Venmo the payment method of choice for the millions of merchants that immediately support PayPal without additional integration efforts.

The vision for using Venmo is that it is not merely a friend-to-friend payment app, but a ubiquitous digital wallet that allows consumers to spend everywhere, regardless of device type. Venmo has not evolved as a cause of dissatisfaction among consumers; it has become trendy among millennials. Due to the possibility of free seller advertising, the brand promotes itself even faster, leaving competitors behind. Thus, payment via PayPal is a standard method for transactions on the Internet, on par with bank transfers via debit or credit card. The service’s widespread use is due to the fast and uncomplicated payment process. Moreover, the company follows innovations and uses multiple platforms to attract consumers. PayPal knows how to manage the advantages and disadvantages, which ensures the company’s success.

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IvyPanda. (2023, July 1). The PayPal Company's Competitive Advantages. https://ivypanda.com/essays/the-paypal-companys-competitive-advantages/

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"The PayPal Company's Competitive Advantages." IvyPanda, 1 July 2023, ivypanda.com/essays/the-paypal-companys-competitive-advantages/.

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IvyPanda. (2023) 'The PayPal Company's Competitive Advantages'. 1 July.

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IvyPanda. 2023. "The PayPal Company's Competitive Advantages." July 1, 2023. https://ivypanda.com/essays/the-paypal-companys-competitive-advantages/.

1. IvyPanda. "The PayPal Company's Competitive Advantages." July 1, 2023. https://ivypanda.com/essays/the-paypal-companys-competitive-advantages/.


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IvyPanda. "The PayPal Company's Competitive Advantages." July 1, 2023. https://ivypanda.com/essays/the-paypal-companys-competitive-advantages/.

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