Therefore, the threat of substitutes remains moderate. The digital age has bought more customers to the platforms than expected, which has resulted in the growth of the digital ecosystem. The increased volume of transactions and the excessive amounts of available data makes it a target industry for data-driven companies. Total transaction value is expected to show an annual growth rate (CAGR 2021-2025) of 12.00% resulting in a projected absolute amount of US$10,520,219m by 2025 (Statista, 2021). The sector has the potential, and the data-intensive nature has made it the primary target industry for technology companies. There is plenty of potentials for the digital payments industry to grow. The threat of better substitutes is moderate to high. The industry maintains its oligopolistic state, and the competition remains moderate to low. American Express reported revenue of $38.1 billion and profit of $3.1 billion, and the company is the highest-ranked US payments processing company in the Fortune Global Index ranked at 67 (Fortune, 2021). Mastercard is ranked 191 in Fortune 500 index the company made a profit of $6.4 billion and revenue of $15.3 billion (Fortune, 2021). Visa reported revenue of $21.4 billion and made a profit of $10.7 billion, with a yield to income ratio of 52.6%, and the company is at 137th rank in Fortune 500 global companies (Fortune, 2021). In the financial year 2020, PayPal earned $17.5 billion and a profit of $2.5 billion (Forbes, 2021). Paypal is at the 182 ranked company on the Fortune 500 index. Its primary competitors are Visa, Mastercard, and American Express. The industry is oligopolistic in its competitive nature, where large services providers operate.
PayPal broke into the industry as an alternative to established corporations and leveraged the available technology to unleash its potential. PayPal is a hybrid company that acts as a Financial cum Technology Company it has its different competitive environment.
Porter’s five forces analysis is a valuable tool to assess the business and financial risk PayPal is exposed to in the global financial services sector. The company employs 27,000 individuals from across the community, acting as a vibrant culture that strives to serve. The company has a diverse and inclusive culture and considers employees the real stakeholders of the entity. Moreover, it has 392 million active accounts, and it has processed more than $1 trillion of payments in 2020. The company acts as a two-sided network that connects consumers and merchants in more than 200 countries. The company has made it possible for untapped markets to be a part of the global economy. The company is the front runner in the digital payments world they made financial services more accessible and acted as a platform for the growth of e-commerce. The company was founded in 1998 as Confinity and later named X.com before settling at its current name PayPal. PayPal is the global online payments processing company based in California, USA.