PayPal upbeat about 2021 prospects

PayPal, one of the world’s largest fintechs, is expecting continued accelerated growth in Latin America this year.

“I think the most important thing that 2020 left has to do with the acceptance of businesses to establish a multi-channel strategy,” PayPal sales VP for Latin America, Federico Gómez Schumacher, told BNamericas.

He said more companies have implemented remote electronic payment systems last year, many of which did not consider the option previously.

"Customers who opened accounts with PayPal realized that there are areas where it is very convenient," said Gómez Schumacher. While acknowledging that the 2020 peaks will not be reached this year, he expects growth to continue.

Last year PayPal handled US$936bn in payment volume, up 31% on a neutral currency basis, according to its earnings report. Revenues reached US$21.5bn, 22% more than the previous year. PayPal added 72.7mn net active accounts, a 95% growth compared to 2019.

The company advocates for more financial inclusion. "The gap that we have in the financial system is not acceptable," said Gómez Schumacher, although many markets are also catching up. "Mexico comes with a much higher growth than Brazil and we see the same thing happening in Colombia," he added.

The most important countries for PayPal in Latin America are Brazil and Mexico.

ALLIANCES

PayPal has forged multiple alliances to add value to its offer.

Last year, it integrated MercadoLibre into a global alliance that allows MercadoPago users to carry out transactions globally through PayPal.

"MercadoLibre is a strategic partner and we see an area of joint opportunity," Gómez Schumacher said.

The company expects growth in intra-Latin American trade and MercadoLibre is an ideal ally to capture this opportunity. "[Intra-Latin American trade] started last year and we believe that trend should continue," according to Gómez Schumacher.

PayPal remains open to other partnerships because “it is not convenient for us to do everything. The market is very big.”

The company seeks to focus on electronic payments, e-commerce and remittance solutions, and complement its offer with alliances with other fintechs, offering loans for example.

PayPal already has agreements with Itaú or Banorte and smaller fintechs that are growing.

In smaller markets such as Uruguay, PayPal has an alliance with virtual wallet provider Prex.

FRAUD PREVENTION

PayPal has focused on fraud prevention and transaction security. Being a network that connects buyer and seller, it manages a lot of information. "We use all that information to provide the service, we are not interested in marketing it," Gómez Schumacher said.

PayPal has developed a system that uses artificial intelligence and machine learning to generate risk models, enabling validated and secure transactions. "In Latin America this has a very important value," he said.