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Despite CEO’s assertions, PayPal is no Yardstick for growth or stability

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It’d be easy to assume that the world teeters on the brink of economic disaster. The United States’ trade war with China continues unabated after recent talks were rain-checked – with no fresh date on the calendar just yet. The threat of a no-deal Brexit has Britain facing recession, while examples of catastrophic inflation, bust tourism industries, and civil unrest worldwide seem like the cherry on a cake melting in the midday sun.

Yet, despite all the evidence to the contrary, one man remains optimistic about the US economy – in particular, PayPal CEO Dan Schulman.

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“Bullish” US Economy

In a conversation with CNBC in November 2019, Schulman indicated that spending activity among its customers was “strong”, a situation he suggested was somewhat representative of US economic strengthoverall: “we’re pretty bullish about […] the economy”, Schulman said. However, while it’s not easy to find per-country figures for PayPal usage, the platform’s membership seems to be quite a poor metric for economic stability or growth. Instead, it’s likely to be representative of something much more personal to PayPal: its own success.

PayPal currently operates in more than 200 countries worldwide, with its recent popularity in the iGaming niche coming as a boon to the platform. Canadian casino review and comparison portal Feedback.casinonotes that its one of the most popular options for making payments in CAD alognside Interac and Instadebit. PayPal is also experiencing significant growth in Chinese markets and continues to push mobile payments to gain ground on leaders Apple, Google, and Samsung. The PayPal mobile app is notably the only solution that works with all manufacturers’ devices.

But as a yardstick for predicting economic conditions, PayPal is not engrained enough in the day-to-day life of spenders to be useful to analysts.

Chance of Recession

If we use Canada as an example, a country that had 6.4m PayPal usersamong its 35m people (both 2016 figures), we can assume that around 20% of many Western countries’ populace had a PayPal account three years ago. PayPal’s global membership has grown an average of 9.8% per quarter since Q1 2018, according to Statista, which gives us a ballpark figure for PayPal usership in Canada of 20-30% of the population in 2019. The number of active, frequent users is likely to be markedly lower though, as is the case with everything from video game accounts to online newspaper subscriptions.

The North American economic story is still unfolding though and Bloomberg currently has the US’ chance of falling into recession within the next 12 months at 26%. Consumer sentiment and trust is low as well and could fall further pending a resolution to the US-China trade war, not to mention the November 2020 US election and the UK general election in December, which could see leadership in the first and sixth largest economies in the world change hands. Trade tensions are reportedly the number one concern for people surveyed by the University of Michigan in October too.

All the above has Wall Street nervous so, while it’s good news that PayPal is not seeing a slump, the company is perhaps looking in all the wrong places.

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