Many small businesses around the world rely on alternative financing companies for their capital with traditional banks often having strict requirements such as a good credit score.
Non-bank lenders like PayPal aim to be the source of funding for these businesses often having less stringent requirements.
As of May 2020, PayPal was ranked as the 54th largest company based on market capitalization with a market cap of $144.3B. PayPal is by far the largest non-bank lender with over $54B in total assets as of February 2021. PayPal’s total assets alone make up almost 60% of the top ten non-bank lenders’ total assets combined.
COVID-19 Pandemic Causes Sharp Increase in Monthly Active Users for PayPal in UK
Monthly Active Users (MUA) for PayPal had actually been in the decline in the UK since February 2017. This decline was halted through a surge in PayPal’s popularity due to the COVID-19 pandemic and the lockdowns that it imposed on many developed markets. In the UK, PayPal grew by about a million MUA since April 2020 from 2.05M MUA to 2.95M in January 2021.
As of Q4 of 2020, PayPal reported 377M active registered accounts globally, a 24% YoY increase from Q4 2019 (305M).
2020 Was A Record Year for PayPal Worldwide
The company also experienced a record year in 2020 as digital payment options became a popular alternative to traditional, physical banks during the pandemic. PayPal’s annual revenue for 2020 increased by over 20% YoY to $21.45B. In the final quarter of 2020 alone PayPal handled $277B in total payment volume taking their total payment volume for 2020 to $936B - a growth of nearly a third YoY.
PayPal also transacted more payments than ever before growing 25% YoY to 15.4M transactions in 2020.
Largest Non-Banking Institutions Have Overtaken “Big Six” Banks in America
Non-banking institutions such as PayPal have become an integral part of the economy in the most developed markets. In the US the market cap of four large fintech companies; Visa, Mastercard, PayPal and Square combined for over 1 trillion dollars. This eclipsed the combined $880B market cap of the traditional “Big Six” banks in America; JPMorgan, Bank of America, Citigroup, Morgan Stanley, and Goldman Sachs.