PayPal's Future Cooperation, Not Competition

Another article published on the public side of, this one revolving around comments PayPal CEO Dan Schulman made at the recent Goldman Sachs Technology and Internet conference. I thought these comments were the best yet at communicating why the partnerships PayPal has made in the past year were necessary to position the company going forward. I know the partnerships were generally not liked on this board, which is why I bring it up here:

Since spinning off from eBay Inc in the summer of 2015, PayPal Holdings Inc (NASDAQ:PYPL) has finalized numerous deals with financial institutions and payment networks. The long-term vision management has presented to shareholders was that these moves would position the company better in a fiercely competitive payments industry.

Wall Street analysts have had a hard time analyzing the deals, however. The primary concern surrounding these agreements is that PayPal might be sacrificing its transaction and operating margins by facilitating more transactions across the Mastercard Inc (NYSE:MA) and Visa Inc (NYSE:V) networks. These networks are more expensive for PayPal than the banks’ ACH network to transfer money.

In recent comments delivered at the Goldman Sachs Technology and Internet Conference, PayPal CEO Dan Schulman probably gave his clearest explanation yet as to why he believes these partnerships were “transformative” for the company. In these three revealing quotes from the conference, taken from the S&P Global Market Intelligence transcript, Schulman explains the difficulties PayPal was experiencing before forging these partnerships and how these deals not only solved these problems but positioned PayPal for growth for years to come.

Read the whole thing at…

Basically, the comments centered around how these deals solved three basic issues: 1) Solved customer confusion suffered while both signing up and using the platform; 2) Enabled PayPal to become a platform used for all payments - online, mobile, and in-store; and 3) Converted competitors to allies. PayPal’s tenuous position as the middleman inpayments made it a favorite target for everybody involved. Now these other players are eager to make deals with them, bringing PayPal more money through its platform.

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