Dynamic Marketing Communiqué

Safely transfer your money online! How PayPal built its customer-centric image [Monday Marketing Marvels]

March 16, 2020

“At PayPal, we put people at the center of everything we do.”

This is likely the first thing you’d see when you take a look at PayPal’s About page on their website.

One of the largest online payment systems in the world, PayPal has 305 million users worldwide and is used in over 202 countries.

Known for being a reliable payment platform, the company’s customer-centric approach is one of the main factors that helped them grow and succeed over the years.

Founded in 1998 as Confinity, PayPal started out as an internal money transfer service for the company.

After merging with X.com in 2000, the company was renamed to PayPal and focused mainly on developing the platform as a dedicated money transfer service where users can make online transactions effectively.

Accessibility and Security

Compared to other types of payment services and platforms, PayPal is very accessible.

Users can make transactions digitally across various devices such as desktop and mobile, making transactions faster and more efficient.

During the early days of e-commerce, it was clear that the need for a reliable digital payment platform was there. Customers had the ability to find products online; it only made sense to ensure that they would be able to make payments in a similar fashion.

Security was also another issue when making these payments. Private information and financial details can get compromised in the process.

PayPal was able to address these key customer needs by creating a streamlined process that made it easy to create a user account. They also implemented a strong security system that prevented identity theft, phishing, and hacking, and developed a “key” system when confirming transactions.

This helped establish PayPal as a trusted online payment platform, with multiple businesses using the platform on their own websites.

A well-known brand that was an early user of PayPal was eBay, one of the world’s largest e-commerce companies and the owner of PayPal from 2002-2015.

Over the years, the number of businesses that used PayPal’s platform increased. As of 2020, there are over 20 million active merchant accounts, consisting of small independent businesses and larger established companies.

PayPal has also acquired a number of companies to expand its range of services. These companies include payment service Bill Me Later in 2008, payment gateway service Braintree in 2013, cybersecurity company CyActive in 2015, and electronic fund transfer service Xoom in the same year.

Other than providing businesses with a secure online transaction platform, they also introduced PayPal Marketing Solutions. This tool enables businesses to drive more sales and get important insights about their customers using PayPal accounts.

This service enables businesses to track data, such as devices used to access their website and the number of PayPal users purchasing. Merchants can also implement incentives that enable users to buy more and improve the purchasing experience.

This platform shows that PayPal is not only committed to providing the best online payment platform but also to help businesses grow in sales and engagement through their enhanced marketing efforts. It’s also great marketing for PayPal since this gives them a better understanding of the needs of different businesses, and provides effective solutions that will drive more sales.

In terms of growth, PayPal has been able to increase its revenue each passing year. In 2019, the company generated USD 17.77 billion in revenue.

  • 2018 – USD 15.45 billion
  • 2017 – USD 13.09 billion
  • 2016 – USD 10.84 billion
  • 2015 – USD 9.25 billion

PayPal’s Earning Power: Valens Research vs. As-reported numbers

PayPal makes for a great case study that we come back to regularly. One great reason?

The company has proven itself to be a phenomenal earning power generator.

So, how well has PayPal been growing its business in the past years?

The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results much higher than what traditional databases show.

The blue bars in the chart above represent PayPal’s earning power (Uniform Return On Assets). These numbers have been positive, going over 20% 5 times for the past 6 years.

The global ROA average is just 6%

The orange bars are the company’s as-reported financial information. If you relied on these numbers, you’d just see the 3.7% orange bar for the 2019 as-reported ROA (return on assets, a measure of earning power), instead of the 21.5% adjusted ROA.

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Their returns have been well above the market.

The numbers show that they are doing well and making a profit.

With the digital world greatly expanding over the past two decades, PayPal was able to address the huge and urgent need for an efficient and safe online payment system.

They provided users with a more convenient way of making payments digitally, allowing them to make transactions from different parts of the world.

PayPal proved to be a game-changer and contributed to the growth of the online marketplace.

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!


Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
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