Not Exactly Your Pal

PayPal and Venmo have dominated the payment space for several years, evolving from small payment options such as an online checkout tool and transitioning to a full person-to-person payment platform.

On the heels of missing their earnings targets and abandoning their 5-year plan to amass 750 million users, the stock plunged 25%. PayPal’s growth has been meteoric and well touted in the news. Sometimes that growth comes at a cost – and not one at their expense.

PayPal recently announced their fourth quarter earnings for 2021 and their previous growth plans were quickly humbled and brought back down to earth. PayPal decided to abandon their plan to invest in attracting new users as they felt there was little to no return on investment. Instead, they are deciding to focus on average revenue per account user, specifically “regular” users or “higher quality” users as they were referred to.

When you study the customer base for PayPal, one third of their users generate the majority of revenue for the company. So, what about the other two thirds? Not “regular” users or “higher quality” users? They have decided to discontinue their incentive program to drive new customer acquisition because what they were getting for their investment were businesses and users that only transacted a handful of times a month. So what, their transactions suddenly did not matter or did not hold any value?

There are roughly 30 million small businesses in the United States and I am sure a majority of them have used either PayPal or Venmo to accept customer payments. But when suddenly PayPal’s bottom line is not being bolstered enough by a certain segment of their business, they pivot completely away from supporting them or focusing on their needs.

Over the past two years with the pandemic, supply chain issues, inflation, the ebb and flow of in person transactions, e-commerce and contactless payments, PolyPay has continued to provide the same level of high touch oversight, partnership and support of all of our customers. Not just ones PayPal would deem “regular” or “higher quality”. To us you are more than a line item on an earnings briefing. This can happen when Wall Street forgets about Main Street. We grew up on Main Street and we are not about to forget where we started or the support of the small businesses who took a chance with us when we were just starting to build our business and our reputation.

PayPal and Venmo have also targeted businesses and entities who are looking for a low-cost way to process payments from customers in a quick, efficient and online manner. Unfortunately, that too has unintended consequences and changes that have arrived on the doorstep of customers to be dealt with. You can thank the American Rescue Plan Act of 2021 for bringing these changes to bear, starting with tax reporting for 2022 in January of 2023.

Now users of PayPal and Venmo who process in excess of $600 annually of taxable products or services on either platform will need to report those payments, provide tax identification, state the nature of the payment and receive a 1099. Previously, users would need to exceed $20,000 in total payments or more than 200 transactions annually. Uncle Sam is watching.

What if you could find a payment processing provider with the experience of Wall Street and the heart of Main Street? Someone who could provide you with a cost-effective solution, make sure your reporting was correct, ensure that your customers could pay with ease and offer dynamic online tools and hardware? You are always considered a “higher quality” user to us. We would like for you to experience the difference. We know we can make a difference.