|08/14/2023||PayPal names new CEO|
|08/07/2023||PayPal launches stablecoin|
|03/07/2023||PayPal's CFO is stepping down|
|02/09/2023||PayPal CEO to step down end of 2023|
|06/28/2022||PayPal announces new business cc|
Facebook Marketing, PayPal/Bitcoin, Usury Part 2, WFH - Ep 46
Reviewing PayPal's Business Loan Charge-Off Rates
Wondering how a competing small business lender with more than $17 billion in originations since inception has been doing lately with? Check out some of PayPal’s business loan and MCA stats:
|Period||% of Merchants Within Expected Timeframe||% of Merchants > 90 Days Past Expected||Net Charge-offs|
PayPal didn’t offer precise quarterly origination figures for its “Working Capital” loan product on Tuesday, but it did reveal total originations since 2013. The number? 1.3M loans for a total of $25.6B across the US, UK, Australia, and Germany. Though there is an international component, the totals are higher than rivals OnDeck and Square Capital over the same time period.
“PayPal Working Capital (PayPal Funding Pro) expanded to France and the Netherlands,” PayPal said in its Q2 announcement, “providing SMBs with simple and flexible funding in minutes.”
The company’s small business lending operations draw little attention given that its payment business, which includes Venmo, is so massive. The size of it first became known in 2019 when it offhandedly claimed $4 billion in annual business loan origination volume for the year. That number shrank to $2.6B in 2020 during the pandemic, which was still more than all of its competitors.
In the US, its loans are actually made possible through WebBank.
PayPal’s Q4 earnings report failed to mention its small business lending division, but an internal assessment of its Working Capital product was made known through a recent interview published by McKinsey.
“Through our PayPal Working Capital product, we are now one of the top five lenders to small businesses in the United States,” said Franz Paasche, PayPal’s SVP, Chief Corporate Affairs Officer at PayPal. “Seventy percent of those PayPal Working Capital loans are going into regions of the country where banks have pulled out, sometimes for good economic reasons,” he continued.
Despite the self-reported achievement, the company’s attention is now focused in a different sector of lending altogether, in the rapidly expanding consumer market known as Buy Now, Pay Later (BNPL).
“Buy Now, Pay Later is a perfect example of the type of investment we are making to give shoppers and retailers more reasons to engage with PayPal,” said CEO Dan Schulman during the company’s recent earnings call. “Buy Now, Pay Later is available in 8 markets, including with Paidy in Japan. We continue to see rapid consumer adoption, with $3.2 billion of Buy Now, Pay Later TPV in Q4 alone, a $13 billion run-rate, with Q4 growth of over 325% year-over-year. We have processed 54 million loans globally since launch, with 13 million unique consumers and 1.2 million merchants using our Buy Now, Pay Later services.”
PayPal’s stock plummeted by 20% after earnings were released that was connected to challenges unrelated to lending facing the company.
PayPal was mum about its working capital loan products in the latest quarterly earnings report, but clues lie in an important line item, Loans and interest receivable. The figure has historically been closely correlated with originations. PayPal reported $3.7B in those receivables at the end of Q3, up from $3.2B in Q2 and up from $2.77B at the end of Q4 2020.
The number was close to $4B at the end of 2019 so the figures represent a return to previous levels.
In the earnings call, PayPal CFO John Rainey said “growth in our short-term installment pay portfolio was the primary driver of this increase.” Rainey appeared to be referring to its Buy-Now-Pay-Later product.
Separately, PayPal announced that Venmo users should be able to pay for purchases on Amazon beginning next year.
This page has been updated to reflect the CFO’s statements that the increase was driven by short-term installment lending.
PayPal reported originating a total of about $2.6B in capital for U.S. SMBs in 2020, which doesn’t include the more than $2B in PPP loans it arranged.
“PayPal delivered record performance in 2020 as businesses of all sizes have digitized in the wake of the pandemic,” Dan Schulman, President and CEO, said.
Exact origination figures are hard to track through the firm’s quarterly reports. The Working Capital product is only mentioned in passing. At the outset of the pandemic, PayPal reported that they helped merchants by “Granting deferral of repayments on business loans and cash advances at no additional cost.”
Throughout the remainder of the year, PayPal was echoing the problems of the industry and slowed down funding as a whole. In the 2021 first quarter call, John Rainey the CFO Global Customer Operations, said that the firm “Tightened underwriting and strong repayment activity contributed to lower balances in our merchant loan portfolio.”
PayPal’s origination volume fell relative to their 2019 estimate.
PayPal launched Checkout with Crypto, allowing users to use Bitcoin, Litecoin, Ethereum, or Bitcoin Cash to checkout at more than 29 million PayPal merchants.
“As the use of digital payments and digital currencies accelerates, the introduction of Checkout with Crypto continues our focus on driving mainstream adoption of cryptocurrencies,” CEO and President Dan Schulman said. “Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies.”
The transactions will be settled in cash by PayPal automatically, and the firm said it does not plan on holding the coins and will likely sell the balance off. PayPal had previously offered to buy, sell and hold cryptocurrencies on their platform through a partnership with Paxos Trust Company.
PayPal said it added crypto purchasing to engage more customers with online merchants and make their purchasing platform more accessible.
How will the transactions be taxed? The terms and conditions state that PayPal will provide 1099 forms and report to the IRS, but “it is your responsibility to determine what taxes, if any, apply to transactions you make.”
A lot of Crypto news happened at once. Yesterday, Visa announced a USD Coin program, aiming to allow transactions to be settled through a stable coin backed by the USD.
PayPal held their earnings results for Q4, describing its strongest year in history by chief executive Dan Schulman.
In Q4 alone, PayPal added 16 million net new million active customers and 1.4 million new merchants and raised $6 billion in revenue. That brings the total to 377 million new users for the entire year.
After adding cryptocurrency to the platform, Schulman said that users that bought virtual assets log in twice as frequently as they did before.
“We have seen an exceptional response to pour crypto launch,” Schulmann said. “The crypto volume traded on our platform greatly exceeded our projections.”
The payments by-now-pay-later product added raised $750 million in the last quarter.
PayPal recently disclosed the dollar amount of receivables it had “purchased” between its working capital and business loan program for the first 3 combined quarters of 2020. The figure was $1.5B, down by more than half from over the same period last year. That would seem to suggest that the actual origination figure is probably $1.3B, which is still larger than some of its closest competitors. Numbers from rivals like Kabbage (recently acquired by Amex) and Amazon were not readily available.
For a larger comparison chart, click here.
2020 YEAR TO DATE:
|Company||Q1 2020||Q2||Q3||YTD TOTAL|
Glass company needs 3rd position...
glass company approx. $30k monthly, no negatives, defaults, a little slow pay history - needs $20k has balance with lender (monthly pay $1200) and pa...
Lifetime Plan for Complete Internet Freedom...
the reliable and fastest vpn for complete internet freedom! experience the high-end security with uncompromised blazing fastest vpn connectivity. bu...
Fund a Paypal bank Account?...
paypal business as his primary bank account... anyone that will fund this kind of deal?...
paypal. we are very particular about our staff and pay more to get a higher quality person with higher moral and ethic code. we are known for deal security. what gives you the idea?". i responded with how i came to the conclusion which was my salesman was on the phone with a merchant that we had an offer from greenbox on for i believe was 21k and were in the process of closing. suddenly the merchant says hold on i'm getting another call, he comes back on the phone after 30 seconds and says who the hell is elliot from greenbox and why are they saying that "brokers are shopping out their file to them because they couldnt get the deal done". keep in mind, contracts had not gone out yet so he had no idea who greenbox was yet. to my surprise (or his admission of guilt) i never heard back from him or anyone else there. i left it alone and gave them the benefit of the doubt hoping it wouldn't happen again once i brought it to their attention. , , fast forward to today.. i get a call from "true capital" number 949-200-1848 asking for my merchant by name thinking he had the merchants number and then i ask which one of my (the merchants) companies he was calling about and he gave the companies correct name (keep in mind i submitted the file to them tuesday). i checked which lenders i submitted that file to which was a total of 2 companies (other lender was in tx) and greenbox was the culprit. true capital has no online presence what so ever which means they are a entity they have just to backdoor which i'm sure they have a few of and true capital is based in fl according to the rep that called. i called back from from a diff numbe...
paypal? , , zero security whatsoever....