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Can PayPal maintain its position as the UK’s most loved financial services brand?

Zoe Davies Senior Executive 6 October 2020

PayPal races ahead of competitors as it clinches first place among the UK’s most loved financial services brands. However, with love of newer brands such as Klarna and Amazon Pay on the rise, can PayPal maintain the top spot?

PayPal's unique relationship with eBay meant it grew rapidly into a major brand

The payment solution provider PayPal wins first place in our Top 100 Most Loved Financial Services Brand report. PayPal began building its brand over 20 years ago and was acquired by the online marketplace eBay in 2002. It was one of the first global online payment solution providers and its unique relationship with eBay meant it grew rapidly into a major brand. Significant expansion means it is now offered as a payment solution by businesses of all sizes and sectors across the globe.

PayPal unsurprisingly scores very highly for being ‘helpful’ in our BrandVue data – it makes the purchasing journey much simpler and more convenient for the consumer. As ‘helpful’ has been identified as the biggest driver of ‘Brand Love’, it’s clear to see why PayPal comes out at number one.

The brand is also is considered the most ‘trustworthy’ of all the payment services brands included in our Top 100. PayPal’s buyer protection policy is a likely contributor to their high ‘trustworthy’ score – where for any purchases made through PayPal that do not arrive, customers are reimbursed for cash loss. This gives consumers reassurance and confidence when using the service which is key when making purchases online.

However, the market is changing. We can already see many online retailers offering customers the option to save payment details to enhance user experience and create the level of convenience that PayPal once held a monopoly over. There has also been an expansion within the payment services market with an increase in competitors offering innovative and appealing services that PayPal are having to compete against. With competition on the rise, can PayPal maintain their number one position in our Top 100 most loved brands?

Our BrandVue data shows that since the beginning of 2020, there have been some slips in key brand metrics for PayPal. Brand consideration and penetration have both slipped marginally, however PayPal’s ‘brand preference’ score has significantly dropped. At the same time, we have seen some increases in penetration, consideration, and preference for Klarna and, to a lesser extent, Amazon Pay.

We are also seeing more of the younger generations opting to use competitor services when going through online check-out. In a  recent article we have explored how Klarna’s ‘buy now pay later’ option particularly appeals to Millennials and Gen Z. For PayPal this means they are losing out as younger customers opt to use Klarna to enjoy their credit instalment offering. PayPal appears to have recognised this threat and in August announced their ‘Pay in 4’ service which will allow customers to pay in instalments, just as Klarna does.

Another competitor which is performing well amongst younger generations is Apple Pay. Although Apple Pay is a service that can only be enjoyed by Apple product users, it places fourth on our Top 100 leader board and Apple Pay scores higher for being ‘helpful’ among Gen Z than PayPal. Apple Pay users only need to provide Touch or Face ID to make payments online – these smart authentication tools are even more convenient than entering a password. Clearly PayPal no longer holds the monopoly over convenience among payment service providers.

PayPal is also not perceived as innovative compared to the brands that are popular among the younger generations. Both Apple Pay and Klarna score higher for ‘innovative’ while PayPal’s score has slipped. Although innovation is not a key driver of brand love, innovations that make customers’ lives easier will impact on how ‘helpful’ these brands are perceived. In order for them to stand out in such a fast moving and innovative market, PayPal will need to remain adaptable.

PayPal is a well-loved market leader, but it will be challenging to maintain ‘Brand Love’ in a market with new and innovative challenger brands competing for customers. This is especially true given the world’s largest online e-commerce marketplace, Amazon, only offers its own Amazon Pay as a payment solution. Also, speculation that the exclusive PayPal and eBay partnership may be coming to an end might mean PayPal no longer has a monopoly over eBay purchases.

In order to maintain this position, it will be key for PayPal to remain being ‘helpful’ and ‘trustworthy’. Yet being adaptable and innovative might help PayPal secure the top spot for years to come.

Find out more about BrandVue Financial Services.