PayPal Poised to Branch Out Further From Mobile Payments With Uber Investment

May 1, 2019         By: Steven Anderson

Just recently, we heard about PayPal’s rapid advances into the small business lending front, a development which actually makes sense the closer you look at it. After all, going from payment processing to lending against expected payments to be processed is as natural as night follows day. Now, PayPal is making another step into a complementary industry, as it plans to buy fully $500 million in Uber Technologies stock just ahead of the company’s initial public offering (IPO).

PayPal is set to pay $47 per share, with plans to buy 10.6 million shares total, according to a Securities and Exchange Commission (SEC) filing. This actually goes along with earlier efforts, PayPal’s CEO Dan Schulman noted, as PayPal and Uber have had a connection for some time now. PayPal has actually been the number one payment processor for Uber in both Australia and the United States since 2013.

Schulman elaborated on the point of previous connections, noting that future developments were set to include other payment collaborations. These were set to include, among other things, a complete digital wallet system branded under the Uber name.

Some might wonder here how PayPal gets to snap up pre-IPO shares, but it’s a safe bet that that earlier connection between the two firms is likely contributing to that preferential treatment. That’s a comparatively minor point, too; what’s really noteworthy here is how increasingly diversified PayPal is becoming.

It’s not moving into other markets just for the sake of moving into other markets, either; it’s moving into other markets that are directly complementary. First we saw PayPal climb to new heights in the lending field—which makes sense; it already processes payments, so why not assume a sort of factor position by lending against expected future payments to be processed—now we see it increase its connection to one of its key use cases: ridesharing.

PayPal could make the case for a lot more expansion going forward, maybe even including a stake in Amazon, where cashless systems take on a whole new level of use. Regardless, though, it’s clear that PayPal has grown well beyond the point where losing eBay’s business was a potential company-ending disaster, and that should be a relief for both PayPal’s users and shareholders.