A Peek Inside PayPal’s Two-Sided Network of Consumers and Businesses

PayPal began with a vision of an online world where consumers could safely, securely, and easily use digital payments to buy what they need and want from businesses. Over the past 24 years, our two-sided network has grown significantly, seamlessly connecting shoppers and retailers across the globe.

Our platform now connects businesses, who look to us to help them navigate the digital economy, with shoppers, individuals who increasingly value flexibility and ease in where and how they shop and manage their daily financial lives.

Annie Freyman, PayPal's senior director for corporate strategy, explains more about the breadth and benefits of our two-sided network and how we continually work to make it secure, flexible, and simple to use.

What do we mean when we talk about a “two-sided network?” What benefits does it provide?

Annie: When we talk about the two-sided network, all we're saying is that PayPal has as customers, both consumers and businesses. That’s a unique aspect for PayPal because most companies are focused on one or the other, and we get to see both sides of that relationship.

If you create a PayPal account as a shopper, you're joining millions of consumers who also have an account with PayPal and you are tapping into a network of some 35 million-plus merchants. These businesses are part of a community that you trust and recognise.

We're able to connect the dots between what consumers and shoppers want and what businesses or sellers want. Everybody wins when there are more connections across that community.

How do the two sides interact with each other?

Annie: If you think about interaction points between consumers and businesses, buyers and sellers, there's a ton of them along the shopping journey.

Say I'm putting wallpaper in a nursery. I'll shop a bunch of different businesses for cloud-print wallpaper, comparing prices. When I decide what I'm going to buy, that's where PayPal steps in and helps facilitate the transaction.

Now, what if the wallpaper shows up and it doesn't look the same colour blue as it did on my computer screen? I want to return it. That’s a whole new experience with the business where PayPal can help protect the consumer through PayPal Purchase Protection on eligible purchases.

PayPal can be part of the interactions that both sides of this network have with one another. From how consumers find out about different offers and new products, how they shop around, to how they compare prices.

Then, of course, we're right there when consumers want to make the purchase. We’re broadening how we think about where PayPal can play across all the interactions between the two sides of the network.

How does PayPal's two-sided network keep customers secure?

Annie: When a transaction happens, businesses need to know something about who is paying and how they're trying to pay, but you, as a shopper, don't have to share that financial information with everyone. PayPal plays the role of guarding those financial details – through PayPal, the information is encrypted and the business instead receives a token.

So as PayPal, we help avoid risk for our customers by not sharing their financial information, but still help to convert the sale for the merchant.

There are very sophisticated fraud organisations nowadays. Say a business gets hacked, and all the information that they had stored about their different customers gets compromised. Shoppers who used PayPal at that merchant are likely to be protected because their full financial information was not  transferred over to the merchant.

How has PayPal’s network and platform evolved as consumer behavior and expectations have changed over the years, especially as online shopping has increased since 2020?

Annie: We're always evolving either to meet changing demands or try to set the bar higher. Here are a couple of ways we've evolved:

  • Choice and Flexibility: The choice is in the shopper's hands to pay how they want, but there's also flexibility to change at any time by selecting different funding methods which are available through their PayPal Digital Wallet.
  • Speed: We balance this choice with speed. That's another high expectation of shoppers. We want the payment to be so easy, it’s like you didn't even notice it happening. There is only friction in the experience where the customer wants it – say, to review bills before paying.

Stay tuned for the rest of this series where we’ll go deeper Behind the Button, exploring how PayPal helps make navigating finances simpler, provides financial flexibility and helps consumers get rewards – all in a secure digital environment. 

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