Payment giant PayPal is experiencing some heartburn due to the loss of a big client.
Reuters reports today that eBay is moving from using PayPal for the mega-retailer’s site operations to its own internal payment system.
That, analysts say, will take around $600 million from PayPal’s revenue projections for the next two quarters.
In response, scores of analysts have cut price targets or downgraded PayPal from ‘buy’ to ‘neutral.’
The company has revised its growth for the current quarter from 11.7% to 6%.
While the loss of eBay certainly stings, it’s not the only major challenge that PayPal is facing right now.
When the company pioneered digital payments, crypto had not yet risen to claim its throne.
With so many payment systems and alternatives in the works, competition for payment facilitating services is high.
PayPal, to its credit, has tried to incorporate a Bitcoin model into its site, but savvy crypto experts show that without custody, PayPal users who buy Bitcoin through PayPal aren’t really buying Bitcoin but just trading on its value.
At the same time, other competitive pressures abound.
“PayPal … faces a threat from competition,” writes an unnamed analyst at Business Strategy Insights. “The company has the highest market share of the online payments business. That makes it a target for most competitors. There are various competitors, such as Google Wallet, WePay, etc., that are fighting for the same market share as PayPal. The threat of competition for PayPal has always existed and will continue to in the future as well.”
The analysis also points to how geopolitical problems could contribute to PayPal’s losses.
“Since PayPal primarily operates from the US, any political tension between the country and others can impact PayPal’s business,” he writes. “A recent example of this is the problems with the US-China political tension. These kinds of political activities can limit PayPal’s activities and reduce its user count. Overall, political tensions present a threat to the company.”
Take a look at how this brand name payment service fares over the coming year.
