The Future of Financial Services

Uber: PayPal Partnership

Why PayPal is invested in Uber and what it means for each and the industry

Henry O’Brien
Jun 19, 2019 · 4 min read

PayPal have been making some interesting investments of late. Despite being among the first pure play FinTechs, PayPal is experiencing increasingly tough competition from emerging players with better technology, as well as from those looking to take more of the payments pie themselves.

PayPal’s $500mln pre-IPO investment in Uber has drawn much attention and in the payments arena is something worth dissecting.

To frame what PayPal are up to, it’s worth highlighting other strategic investments which they have been making; India’s Pine Labs; Korea’s Viva Republica; in Europe, startups such as savings company Raisin; UK based cross-border payment startup PPRO; and more notably a $750 million investment in Argentina’s MercadoLibre.

Recall, PayPal was born out of eBay. Uber clearly has ambitions to create a marketplace type solution. MercadoLibre is Latin America’s answer to eBay and similar to Alibaba mirroring PayPal with Alipay, MercadoLibre commercializes the whole process of buying and selling via their own payments platform called MercadoPago.

On their 1Q earnings call, PayPal’s CEO cited the company’s “willingness to invest in or acquire companies that advance their strategic agenda.” After all, it’s tough to completely shun those who made your growth possible in the first place. FWIW this is a similar strategy we are seeing be deployed by banks i.e. to partner vs. protect.

For the already known global marketplace leaders, PayPal’s optionality for partnerships appears to be running out; Alibaba has Alipay, eBay are going it alone and working with Adyen and Amazon have shaken out as PayPal’s arch rival. Walmart have proved to be a friendly ally in a relentless effort to round the networks, announcing a strategic partnership with PayPal in October of 2018. Remember Walmart holds a 77% stake in Flipkart, India’s answer to mass marketplace e-commerce.

As things stand, PayPal is Uber’s leading payment provider in the US and Australia, with the aim being to scale this offering globally. Uber also works closely with PayPal rival Adyen, most recently working with them to ensure PSD2 compliance via incorporating the latest version of EMVCo’s 3-D-Secure authentication (for identity vetting). Beyond this, PayPal are likely keen to play their part in helping Uber’s in-house efforts in providing payments and managing transactions. Also worth referencing is PayPal’s 2015 acquisition of Paydiant and in turn, PayPal’s expertise in white label wallet solutions. Taken together, this all sounds somewhat familiar; you seemingly have Uber seeking to look something like the PayPal/eBay combo of old.

All the moving parts touched upon above, one must then identify the glue that is going to bring it all together. Which also may be where the ties with PayPal lie. Then we’re led to the idea of acceptance. The latter leads to the third way that PayPal and Uber might be working together down the line…

PayPal today has 22 million merchants on its platform, and an integration with Uber — through Uber Cash and Uber Card — could become another opportunity for merchants to reach customers i.e. just as people can pay today for something online with the PayPal button/app, one idea that’s being considered is how to expand the Uber Cash network to allow people to pay for more than just Uber rides and Uber Eats. Think, Uber-Pay being run on a white-labelled version of PayPal’s infrastructure.


We wrote at length about what Uber are seeking to achieve in payments and financial services here. With more and more pressure being piled on incumbent players by regulations such as PSD2 as well as new and preferred payment methods around the globe, PayPal could be deemed to be in danger, albeit not as much as the traditional banks etc.

However, it may often be forgotten that PayPal own A LOT of transaction data and via smart acquisitions, such as the aforementioned Paydient, PayPal also offer partners expertise in payments unrivaled by peers. Interestingly, recent strategic investments have been made with those perhaps most likely to displace the company given an ever-changing landscape.

By partnering with AND investing in Uber, PayPal has a front row seat to all that is being done to change how consumers transact, whilst benefiting from upside in the platform and remaining relevant by helping to build the future of financial services, for which Uber will inevitably play a key role.

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Henry O’Brien

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