PayPal threatened by dangerous competition amid currency woes: report

PayPal CEO Dan Schulman highlighted the danger from competitors Jan. 26 as rivals ramp up their mobile-payments game and the San Jose firm faces ongoing currency troubles.

“Payments are rapidly digitizing,” Schulman said, according to a new report, as the firm released quarterly earnings. “Mobile is redefining the face of retail.”

PayPal chalked up a 17 percent jump in revenue for 2016’s fourth quarter, and predicted first-quarter revenue would roughly match analysts’ expectations, with “flat to slightly better operating margins” for the year, Reuters reported, calling the firm’s 2017 outlook “subdued.”

Fourth-quarter results took a hit from currency fluctuations that will continue through the year, chief financial officer John Rainey said.

PayPal’s stock fell to $40.25 Friday morning from $41.50 at close of trading Thursday, a 3 percent drop.

Schulman said PayPal’s investment in its own offerings is “increasingly important” in the face of rising competition.

On the day of the earnings report, Chinese e-commerce firm Alibaba’s affiliate Ant Financial Services said it was going to buy U.S. money-transfer firm MoneyGram, “in a deal that is expected to shake up the international payments landscape,” Reuters reported.

Ant has been growing in China and overseas as it gets ready for an IPO this year, according to Reuters.

In the U.S., an impending launch by payments startup Zelle, which Zelle said would be used by banks including Bank of the West, casts a cloud over PayPal’s market position, while Apple and Google “are also looking to capture new customers through payments and money transfer services,” Reuters reported.

PayPal has responded to its rivals by “expanding its network of strategic partnerships and launching or acquiring new services,” Reuters said.

The company in January announced a deal with credit-card company Discover Financial Services to ease PayPal customers’ use of Discover’s offerings, and PayPal has also entered partnerships with Citigroup and Fidelity National Information Services, according to Reuters.

 

Photo: An exterior view of eBay/PayPal offices in San Jose (AP Photo/Paul Sakuma)

 

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