The above graph represents PayPal annual revenue by products and services – Transaction revenues and Other value-added services. In 2018, PayPal generated $15,451 million ($15.5 billion) in revenue, globally. Interestingly, nearly 89% of the company’s total revenue in 2018 came through transactions. PayPal’s transactions revenue in fiscal 2018 increased a notable 19% YoY, clocking $13,709 million ($13.7 billion). This was primarily due to the growth in TPV (total payment volume), mainly from PayPal and Braintree products, and in the number of payment transactions.
On the other hand, PayPal’s revenue from other value-added services in 2018 increased a significant 9.4% YoY to $1,742 million ($1.7 billion). According to PayPal, its net revenue from other value-added services was positively impacted by growth in interest earned on customer balances. However, in 2017, PayPal witnessed a whopping 27% YoY growth in its revenue from other value-added services, which was primarily due to interest and fee income earned on our loans receivable portfolio.
In the last 7 years, PayPal transaction revenues increased over two folds, from $5,028 million in 2012 to $13,709 million in 2018. While the net revenues from other value-added services increased from $634 million in 2012 to $1,742 million in 2018.
PayPal Revenue: Additional Information
PayPal describes the transaction revenues as the net transaction fees charged to its merchants and consumers on a transaction basis which primarily based on the volume of activity, or TPV, completed on Payments Platform.
PayPal’s net revenue from its other value-added services is derived primarily from revenue earned through partnerships, subscription fees, gateway fees, and other services the company provide to its merchants and customers.
Founded in December 1998 as Confinity Inc., by Max Levchin, Peter Thiel, Luke Nosek, and Ken Howery, PayPal Holding Inc. (NASDAQ: PYPL) was funded by John Malloy from BlurRun ventures.
However, it was March 2000, when Confinity merged with X.com, an online banking company founded by Elon Musk in November 1999. The visionary Musk was quick to visualise the future potential of the money transfer business Confinity was developing. In contrast to that, Bill Harris, the then-president and CEO of X.com, didn’t find much merit in Musk’s thoughts. Soon, Harris decided to part ways was Musk was determined to stay focused on Confinity money transfer service. He was so committed that he terminated the company’s all other Internet banking operations in order to remain focused on the money transfer business.
All these shifts created an impact on Elon Musk’s position in the company he was replaced by Peter Thiel as CEO of X.com. In the following year, the X.com was renamed as PayPal.
The astounding growth of PayPal convinced executives to launch the IPO of PayPal in 2002. After the celebrated acquisition by eBay Inc. (NASDAQ: EBAY) in July 2020 which valued PayPal $1.5 billion – 7% above the IPO price – it was clear that PayPal is en route to become a global leader in money transfer business.
After thirteen years of being under the umbrella of eBay, PayPal once again became an independent publicly traded company.
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