E-Business Report: Analysis of the PayPal Payment System

This report provides a detailed analysis of the PayPal payment system, examining its target segments, mechanics, providers, legal basis, marketing strategies, and technology platform. It explores PayPal's competitive environment, reach, strengths, and weaknesses, offering recommendations for improvement. The report highlights PayPal's use of Apache as its web server and its commitment to secure transactions through data encryption and authentication technologies. It also discusses the pricing strategy and the various fees associated with PayPal's services. Furthermore, the report touches upon the challenges PayPal faces from competitors like Wepay, 2Checkout, Skrill, and Stripe, and concludes with suggestions for PayPal to enhance its services and address user feedback. This document is a valuable resource for understanding the complexities and dynamics of the PayPal payment system within the broader e-business landscape and is available for students on Desklib.

E-Commerce
Running head: E-Business 0
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Contents
Introduction......................................................................................................................................2
Target Segment................................................................................................................................2
Mechanics........................................................................................................................................2
Providers..........................................................................................................................................3
Legal Basis.......................................................................................................................................3
Marketing.........................................................................................................................................3
Technology platform.......................................................................................................................4
Competitive environment................................................................................................................4
Reach...............................................................................................................................................5
Strength and Weakness....................................................................................................................5
Recommendations............................................................................................................................5
References........................................................................................................................................6

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Introduction
The payment methods selected for the preparation of this report is Paypal. People use this
option to make an online payment. In the presented report, many of the aspects related to Paypal
will be brief.
Target Segment
The main target of Paypal is customers at retail stores. Retail E-commerce is a platform
where many people use PayPal for the payment. Further E-market is another segment where the
selected payment option is doing well. In addition to this PayPal, also perform online processing
for auction sites, vendors and other commercial users (O'Regan, 2015). Students are also one of
the target segments of this payment method. They use this method to make payment of their fee
and to take subscription of libraries and other academic sources. Subscription of media service
providers such as Netflix, amazon prime, and so on are also counted as target segment of PayPal.
By using this mode, people may simply take a rest from the issue of carrying physical money
with them.
Mechanics
In order to check the basic transaction process of PayPal, this is to state that firstly
customers are required to create an account on this app. After creation of an account, the user has
to link the same with his/her bank account or cards (Debit/credit) by giving the necessary
information such bank name, account number, card number and so on (Bonnington, 2018). In
those cases where people have to send money, the select on PayPal as a payment method. The
app gets payment instruction and confirms the same to a third party (bank of the user). Once the

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bank confirms the payment, PayPal initiates the transaction and credit the account of another
party. The user may also request money via this app. For request of money too, the process is
almost similar.
Providers
The providers of such services are different in every nation. PayPal itself provides such
services. For instance in India, PayPal Payments Private Limited is there to provide relevant
services. PayPal Holdings, Inc. is the US-based company, which is responsible to provide PayPal
services across the US.
Legal Basis
The legal regulation that governs this framework is different in every country. Firstly,
this is to understand that PayPal is not a bank. In the US, it has a license of money transmitter
based on state practices. In addition to the state laws, being an American company it has to
comply with certain rules and regulations. The Electronic Fund Transfer Act and the USA Patriot
Act are lead legislations that are applicable to the selected company. The company is conducting
its business in Europe and has a Luxemburg Banking license. In Australia, PayPal is delivering
its services under license of the authorized deposit-taking institution and banking laws and
regulations of the nation is applicable to the same.
Marketing
In order to discuss pricing strategy and methods of PayPal, this is to state that it is
straightforward. For different payment processing, PayPal quotes different charges/prices. There
is no monthly or minimum fee. The user may pay flat fee irrespective of the type of fee. Certain

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optional cots are also there. Payment pro service and recurring billings are facilities for that
PayPal charge additional cost from its users (Johnson, 2018). Further eBay users have promoted
PayPal as a means to exchange money for their online auctions at its initial time. eBay had its
online payment system named Billpoint and PayPal trumped the same.
Technology platform
PayPal uses Apache as its web server. PayPal works on the desktop as well as on
smartphones for end users, as it believes in one-touch technology across the globe (Perez &
Cutler, 2015). It is important to ensure that the express checkout integration is conformed to user
interface requirement of PayPal. PayPal has a complete guide on User interface standards on
express checkout (Paypalobjects.com, 2019). The company has strong authentication
technologies. Authentication of customers is a much-needed thing and therefore PayPal offers
several services that help merchant in this. Adaptive accounts, permission services, connect with
PayPal and Vault; these are lead technologies that PayPal use in authentication
(Developer.paypal.com, 2019). Users may secure the information related to their PayPal
transaction by using data encryption method. Further whenever a user register or login with
PayPal from desktop or mobile, PayPal ensure that the user is only making HTTPS connections
and connecting with TLS 1.0 or higher (Paypal.com, 2019).
Competitive environment
PayPal made the online transactions very easy as it is far easy to understand and use. In
the 21st Century, almost no business works in a monopoly market and hence faces competition.
PayPal also faces the same. Many of the other platforms and gateways are there which provides
similar services and is giving tough competition to PayPal. This includes Wepay, 2Checkout,

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Skrill Stripe, amazon payment, Payza, and many others. Square seems to be disruptive for
PayPal as it has been counted as one of the best alternatives of PayPal (Fabregas, 2019).
Reach
Up to Fourth Quarter of the year 2018, the company had 267 activated accounts
worldwide (Statista.com, 2019). In addition to this, the reach and success of this business can be
understood by the fact that in the Fourth Quarter of the year 2018, the numbers of payment
transactions were 2.9 billion.
Strength and Weakness
PayPal has many advantage and positive points. These include secure, fast and easy
features. PayPal keep the information secure, it is easy to use, and at last, it completes the
transaction in faster ways as users do not have to fill all the financial information every time.
Nevertheless, some weaknesses of this service are also there. The lead disadvantage is for eBay
seller. They cannot have immediate access to funds. Further, PayPal may limit the amount of
transaction for users if they breach any rules or regulations. It creates an issue for them.
Recommendations
PayPal should have a look at the policies of its competitors and work in the sector where
they are weak. Further, the same should work on reviews and complaints made by users.

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References
Bonnington, C. (2018). Everything you need to know to get started on PayPal. Retrieved From:
https://www.dailydot.com/debug/how-does-paypal-work/
Cornelius Gerard, O. R. (2015). Pillars of Computing: A Compendium of Select, Pivotal
Technology Firms. Springer.
Developer.paypal.com. (2019). Authentication & security. Retrieved From:
https://developer.paypal.com/docs/authentication-security/
Fabregas, K. (2019). 6 Best PayPal Alternatives 2019. Retrieved From:
https://fitsmallbusiness.com/paypal-alternatives/
Johnson, M. (2018). PayPal VS Stripe. Retrieved From:
https://www.merchantmaverick.com/paypal-vs-stripe/
Paypal.com. (2019). Email, encryption, and other protections. Retrieved From:
https://www.paypal.com/us/webapps/mpp/security/security-protections
Paypalobjects.com. (2019). Express Checkout User Interface Standards. Retrieved From:
https://www.paypalobjects.com/webstatic/en_US/developer/docs/pdf/pp_ecplacement_gu
ide.pdf
Perez, S. & Cutler, K., M. (2015). PayPal Brings Its Instant Checkout Service “One Touch”
Across The Web. Retrieved From: https://techcrunch.com/2015/04/28/paypal-brings-its-
instant-checkout-service-one-touch-to-the-web/

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Statista.com. (2019). Number of PayPal's total active registered user accounts from 1st quarter
2010 to 4th quarter 2018 (in millions). Retrieved From:
https://www.statista.com/statistics/218493/paypals-total-active-registered-accounts-from-
2010/