Many small businesses around the world depend on alternative finance companies for their capital, with traditional banks often having strict requirements such as a good credit rating.
Non-bank lenders like PayPal aim to be the source of funding for those businesses that often have less stringent requirements.
As of May 2020, PayPal was ranked the 54th largest company by market cap with a market cap of $ 144.3 billion. PayPal is by far the largest non-bank lender with more than $ 54 billion in total assets as of February 2021. PayPal’s total assets alone represent almost 60% of the total assets of the top ten non-bank lenders combined.
COVID-19 pandemic causes sharp increase in monthly active users for PayPal in UK
Monthly active users (MUA) for PayPal had actually been down in the UK since February 2017. That drop was halted by an increase in PayPal’s popularity due to the COVID-19 pandemic and the lockdowns it had experienced. imposed on many developed markets. In the UK, PayPal has grown by around one million MUAs since April 2020, from 2.05 million MUAs to 2.95 million in January 2021.
In the fourth quarter of 2020, PayPal reported 377 million active registered accounts worldwide, a 24% year-over-year increase from the fourth quarter of 2019 (305 million).
2020 was a banner year for PayPal globally
The company also had a banner year in 2020, with digital payment options becoming a popular alternative to traditional physical banks during the pandemic. PayPal’s annual revenue for 2020 grew more than 20% year-over-year to $ 21.45 billion. In the last quarter of 2020 alone, PayPal processed a total payment volume of $ 277 billion, bringing their total payment volume for 2020 to $ 936 billion, almost a third year-on-year growth.
PayPal also made more payments than ever before, increasing 25% year-on-year to 15.4 million transactions in 2020.
Largest non-bank institutions overtake America’s ‘big six’ banks
Non-bank institutions such as PayPal have become an integral part of the economy of more developed markets. In the United States, the market capitalization of four major fintech companies; Visa, Mastercard, PayPal and Square combined for more than $ 1,000 billion. This eclipsed the combined market capitalization of $ 880 billion of traditional “Big Six” banks in America; JPMorgan, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs.