Brief:

• PayPal this week expanded its relationship with Google to make payments easier among all of the search giant's services, including YouTube, Gmail and the Google Play store, according to a PayPal blog post.
• Once integration is completed this year, PayPal users who authorize a payment in any one Google service won't need to log in again to make future transactions in the entire Google ecosystem. U.S. users will then be able to select PayPal as a quick option at checkout, including on peer-to-peer payment platforms like Google Pay.
• The additional functionality builds on an existing relationship between PayPal and Google that lets consumers make payments at stores, on websites, in mobile apps and through the Chrome mobile browser.

Insight:

PayPal, which had 237 million active accounts worldwide as of Q1 2018, is becoming a highly versatile payment platform with continued integrations with Google. The new strategy that links payment across the entire Google ecosystem will likely provide a more efficient and less frustrating option for consumers during checkout, especially for those who make frequent purchases on Google's range of services. This will likely lead to a higher number of transactions made through PayPal, as many customers could be drawn to the convenient payment system. The higher transaction volume would then boost PayPal's revenue potential, especially after former owner eBay in February dropped the company as its main payment processor in favor of Dutch rival Adyen, a major loss for PayPal.

This comes as PayPal continues to diversify its services as it seeks to retain its foothold in digital payments amid growing competition of mobile, peer-to-peer and other cashless payment options. Apple, Amazon, traditional banks and even PayPal's partner Google are among the companies that already offer or are testing similar payment features that take aim at a core feature of PayPal. The mobile economy's growth depends on non-cash transactions that PayPal has worked to develop for years. The company is focused on giving the "unbanked" a pathway to contribute to the digital economy, especially as companies like Uber and Airbnb require digital payments, per The Wall Street Journal. Last week, PayPal acquired Swedish startup iZettle for $2.2 billion to expand into in-store payments and further diversify its capabilities.

For Google, the stronger ties to PayPal means that its users will be more likely to stay within its sites to complete a quick transaction rather than go elsewhere and have to input credit card and billing information again. Google in January brought together its various payment services as a single unified Google Pay brand. The tech giant had previously offered mobile payments, in-store checkout and money transfers among friends through several services such as Android Pay, Google Wallet and several others. Google's move to unify its various payment platforms was necessary as the search giant faces growing competition in mobile payments from Apple, traditional banks and PayPal.