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The above graph represents PayPal annual revenue by segment – Transaction revenues and Other value-added services. PayPal annual revenue in 2019 clocked $17,772 million ($17.8 billion), globally. Interestingly, a whopping 90.6% of that came through transactions. PayPal transactions revenue in 2019 increased an impressive 17.4% YoY, clocking $16,099 million ($16.1 billion). This was primarily due to the growth in TPV (total payment volume), mainly from PayPal and Braintree products, and the growth in number of payment transactions.
On the other hand, PayPal’s revenue from other value-added services declined nearly 4% YoY in 2019 to $1,673 million ($1.7 billion). The decline in other value added services revenue was primarily due to the lower interest and fee income earned on PayPal’s consumer loans receivable.
PayPal Segment Revenue: Additional Information
|Source||PayPal Annual Reports|
|Note||PayPal fiscal year starts from January 1st|
In the last 8 years, PayPal transaction revenues increased over three folds, from $5,028 million in 2012 to $16,099 million in 2019. While the net revenues from other value-added services increased over 2.5 folds, from just $634 million in 2012 to $1,673 million in 2019.
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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