PayPal Is Now Exploring Stock Trading After Crypto to Capitalize on Retail Trading Boom
After rolling out the ability to trade cryptocurrencies, PayPal is now exploring stock trading.
The payments giant, which has more than 400 million accounts worldwide, has been exploring ways to let users trade individual stocks, reported CNBC, citing sources familiar with the plans.
As part of this move, the California-based company recently hired brokerage industry veteran Rich Hagen is now the CEO of the ‘Invest at PayPal’ division previously unreported.
Just last week, PayPal expanded its crypto services beyond the US and into the UK. Jose Fernandez da Ponte, PayPal's general manager for blockchain, crypto, and digital currencies, noted that customers in the UK who have bought crypto through its platform log in twice as often as those who haven’t.
“We expect digital currencies to play an important role in consumer payments over the longer term.”
According to Nigel Green of financial services firm deVere Group, cryptocurrencies will replace traditional money. Though that time is yet to come, he said PayPal’s announcement is “yet another example that exposes cryptocurrency deniers as being on the wrong side of history.”
“This is a major step forward towards the mass adoption of digital currencies. More and more payment companies will naturally follow their lead.”
Retail’s the Way
Earlier this year, at the company’s investor day, PayPal CEO Dan Schulman had spoken about including more financial services including “investment capabilities” as a long-term vision for the company.
This move comes amidst the explosion of retail trading propelled by lockdown during the pandemic and fiscal stimulus released by the governments. According to JMP Securities estimates, more than 10 million new individual investors entered the market in the first half of 2021.
Trading has become a booming business with PayPal competitors Square offering crypto and stock trading through its Cash App. Robinhood has also seen explosive growth with over 22.5 million customers and doubling revenue in Q2 from a year ago, with crypto accounting for an increasing percentage of it.
Much like with crypto, PayPal wants to capitalize on the trend, but the service is unlikely to be rolled out this year though they are already having discussions with potential industry partners.
This retail trading boom is also leading to more regulatory scrutiny, with the US Securities and Exchange Commission (SEC) saying last week that it is stepping up its inquiry into “gamification.”
PayPal (PYPL) stocks are up over 5.5% in the last 3-days of trading at $288.47, near its all-time high of $310.16 from late July.