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July 17, 2016updated 15 Nov 2023 12:20pm

What is PayPal?

Making online payments easy since 1998.

By Joao Lima

PayPal is an online payments company.

The American company operates a worldwide online payments system which lets people transfer money online. PayPal is often thought as a digital alternative to checks and money orders.

As one of the world’s largest internet payment companies, the company also acts as a payment processor for online retailers, auction sites and other commercial online vendors.

The company was founded in December 1998, under the name Confinity. In 2002, the company went public and later became a wholly owned subsidiary of eBay.

After eBay spun-off PayPal into an independent company in 2015, the payments giant had its second IPO. The IPO valued the company at $46.6bn.

How does PayPal work?

The company generates its revenue through transaction fees across its various payment products, as well as through other value-added services such as interests and fees earned from credit loans, subscription fees, and partnerships.

PayPal works by letting any business or individual with an email address to securely, conveniently and cost-effectively send and receive payments online.

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“Our network builds on the existing financial infrastructure of bank accounts and credit cards to create a global, real-time payment solution. We deliver a product ideally suited for small businesses, online merchants, individuals and others currently underserved by traditional payment mechanisms,” says PayPal.

According to Statista, in 2014, PayPal processed total payments of $234.64bn, with mobile payments amounting to $46bn.

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