Today, PayPal ($PYPL) is number one in the mobile and digital payment space. However, for them to stay there, changes must be made. New competitors are rapidly moving in, changing and expanding the entire space. So, PayPal must change and expand the meaning of their brand in the mind of the marketplace, for customers, merchants and investors.
I believe new PayPal CEO Dan Schulman understands the tidal wave of change that is starting to transform the entire segment. He understands that the digital payment space is expanding to the mobile world and will continue to change and become much more over the next few years.
The Challenge Facing PayPal
When the average user hears the name PayPal, they think of it on a completely different level than credit cards. In fact, they think of PayPal on a completely different level than Apple (AAPL) Pay or Google Pay as well. Yet, as the industry transforms, PayPal must decide which category they want to play in, and rapidly grow and evolve their brand.
PayPal must expand their brand and increase their credibility in the consumers mind. If not, I fear they will be destined to remain at a lower level as the industry grows around them.
PayPal Must Update Their Brand
While PayPal may be the oldest and most established mobile and digital payment provider, if you zoom out back you can see the massive industry-wide expansion and transformation.
There will be changes in the way we think of PayPal, and in fact, the entire industry segment. New competitors like Apple Pay, Google Pay, Samsung Pay, CurrentC and others are presenting a real threat to the status quo...and PayPal is the status quo.
We are still in the very early innings of this brand new game. As new competitors rapidly enter this space, they have the potential to transform things the same way the iPhone and Android transformed the smartphone space. Remember how they sent past leaders like Nokia (NOK) and Blackberry (BBRY) to the woodshed a few years ago?
Things can change quickly, so you must continue to ride the wave...or it will leave you behind.
PayPal Must Think Like an Upstart
Could the same thing happen to PayPal? That’s the threat. The PayPal position has several pros and cons. They must re-resh, expand and update their older brand. Age has it’s own pros and cons. On one hand, age means stability and longevity. On the other hand, age could also mean stiffness and resistance to change.
That’s why PayPal must think and act like a young and aggressive upstart to compete effectively with new competitors.
These kinds of challenges have occurred before. Some companies have done well refreshing the brand. Others have not.
AT&T (T) is a success story. As the telecom industry was struggling through an era of transformation more than a decade ago, SBC the local phone company based in San Antonio Texas rapidly acquired BellSouth, Cingular and AT&T. Next they changed the name of this new giant to AT&T.
So, the rapidly growing AT&T of today is not the same company it was a decade ago. This is a powerful success story to study. AT&T refreshed the brand. They updated the technology and the offerings as the industry did the same. Plus, they updated the well known (but tired) brand.
What Else Must PayPal Do?
This is the kind of updating and expanding PayPal must do to both their offerings and to their brand identity.
Without the update and refresh of both, the mobile payment space could fly past them in a mad rush. However, if PayPal can update both their technology and their brand identity, they could continue to be an important leader in this space.
One thing is for sure, there will be more competition, and the mobile payment space will continue to rapidly change and expand. The future looks much larger and stronger than ever before. PayPal can be a leader in this space, however, there will also be plenty of powerful brand name players who today capture the imagination like Apple and Google (GOOG) .
Does Dan Schulman understand these new challenges and the new opportunities? I have watched him over time and I believe he does. He may have just what PayPal needs to transform as the industry transforms. However we’ll have to watch them going forward.
PayPal must focus on innovation in order to continue to be a leader in the space. Their past is strong, and their present also looks solid. However, with all the new competitors and innovation changing the space, the future is still a question mark.
Equities.com columnist Jeff Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst and consultant. He shares thoughts on the changing industry, which he's been following for 25 years. He follows what's hot, what's not, why and what's coming next. Email him at jeff@jeffKAGAN.com.
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