As recent disclosures from Amazon.com (AMZN) and Apple (AAPL) show, PayPal (PYPL) arguably faces a tougher competitive environment than it has seen in many years, as tech giants that already have the payment card data of hundreds of millions of consumers try to muscle in on its turf. This elevated competitive environment might just have something to do with the moderate slowdown recently seen in transaction volume growth for PayPal's core services.
But the online payments giant can't be accused of not taking the threat seriously, as shown by its efforts to roll out multiple compelling mobile-friendly payments offerings. This, along with consumer familiarity with PayPal, could allow the company to weather the storm, even if it collects some bruises along the way.
This week, PayPal announced that its One Touch payments solution, which allows users to make purchases without entering their login info every time they do so, has now been activated by over 50 million accounts. That's up from just 21 million as of last April, and is equal to a quarter of PayPal's 200 million total active accounts.
PayPal also claims that over five million merchants now support One Touch, including 75% of the top 100 U.S. online retailers. And that the solution's conversion rate -- the rate at which consumers who have placed items into an online shopping cart end up buying them -- is an impressive 87.5%, according to a comScore study.
Though also working on PCs, One Touch is of particular value on mobile, where users dislike repeatedly entering their login info (never mind all of their billing/shipping data) to make a purchase. That's one reason why, although most sites report getting a majority of their traffic from mobile devices (mostly smartphones), many online retailers still get over half their orders via PCs.
Adobe's (ADBE) analytics arm estimates that mobile devices accounted for 56% of Thanksgiving weekend site visits for the online retailers it tracks, but only 37% of their sales. PayPal handled $31 billion worth of mobile transactions in the fourth quarter, up 53% annually but still only equal to 31% of its total transaction volume.
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