Here's How PayPal Became the Internet's Largest Payment System
Elon Musk played a part and now Venmo is keeping it strong.
PayPal is the global online payment system that helps individuals and businesses make electronic money transfers. The company played a crucial role in the development of e-commerce by serving as the world’s first digital wallet — a convenient alternative to old-school paper transactions such as cash and cheques.
In 1998, Max Levchin and Peter Thiel founded the first iteration of PayPal (then called Field Link), which users could only use if they owned a PDA device. In 1999, the dot com bubble started and the Internet became a more feasible platform with a larger user base. PayPal received backing from Nokia and launched a simplistic system in which users only needed an email account and credit card to send money to anyone, anywhere in the world. PayPal grew even more when it partnered with eBay in 2002, the pioneering online marketplace, which had up until then depended on physical cheques as payment.
At this time, PayPal had several competitors, amongst which was a company called X.com, founded by Elon Musk. X and PayPal eventually merged in 2000, a move that helped PayPal survive the dot com crash. This early PayPal team was the beginning of what’s now known as the PayPal mafia, which includes major players such as YouTube, Tesla, Yelp, LinkedIn and more. By 2011, PayPal expanded to 100 million users worldwide. After strengthening security and fraud reporting, PayPal eventually broke the 200 million mark in 2017, making it to the Fortune 500 Index.
Today, Venmo, PayPal’s stand-alone P2P (peer-to-peer) platform has tapped into an even more convenient system of payment. Its social-mobile platform proves to be an exceptional growth driver for PayPal, expanding the company’s user base and earnings. In this year’s Q2 earnings report, Venmo users made $8 billion USD in transactions, driving 103 percent annual growth — cementing Venmo’s 16th consecutive quarter of triple-digit growth.
Recently, Elon Musk bought back X.com’s domain name from PayPal, with little information on what the mogul plans to use the website for. Let us know your thoughts on PayPal’s story and share any additional insight on the development of online payment systems.
