Money moves PayPal in new direction
PayPal Inc. is continuing its evolution from serving as the digital payment platform for former parent company eBay Inc.
Since its July split from eBay, new PayPal initiatives have included serving as a payment option for a number of new retail partners, reversing a policy that previously excluded U.S.-based online gambling sites from accepting PayPal, and expanding a global free returns service in the U.S.
In its latest post-spilt move, PayPal has completed the previously announced acquisition of digital money transfer service Xoom. Xoom will operate as a separate service within PayPal under the continued leadership of former CEO John Kunze, who has joined PayPal’s executive staff and will report to PayPal CEO Dan Schulman.
Xoom allows consumers around the globe to securely send money to, and pay bills for, family and friends around the world via mobile phone, tablet or computer. With Xoom, PayPal has access to 1.5 million active U.S. customers that send money globally. In addition, 97% of Xoom’s payment volume is from repeat users and 60% is transacted via mobile device.
PayPal says it plans to “democratize” the global management and movement of money with this acquisition. In addition, Xoom will help accelerate PayPal’s entrance into the international remittances market, while PayPal will help expand Xoom’s services to more consumers and global locations.
For retailers, easing the flow of money from the U.S. to overseas locations, especially developing nations, could boost international profit opportunities. In particular, retailers could target certain demographic groups that have a large recent immigrant population in the U.S. for cross-promotional and purchase opportunities.
For global consumers, increased access to funds coming from family and friends in the U.S. could help boost purchase power and interest from U.S.-based retailers. Of course, PayPal and its Xoom subsidiary collect fees on all this movement of currency, providing benefits to all parties involved.