Reasons determining international digital payment companies’ necessity for adaptation on foreign developed markets when expanding abroad with blockchain technology and cryptocurrency related services by the example of PayPal’s expansion to the United Kingdom market
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Introduction 3
1. Theoretical foundation of the development of international payment systems using blockchain technology and services related to cryptocurrencies 7
1.1 The types of international payment systems and their adaptation on foreign markets 7
1.2 Reasons determining international digital payment companies’ necessity for adaptation on foreign markets with blockchain technologies and cryptocurrency related services 19
1.3 Reasons determining international digital payment companies’ necessity for adaptation on foreign developed markets when expanding abroad with blockchain technology and cryptocurrency related services 31
2. Analysis of the mechanism for introducing international digital payment companies into foreign markets by the example of PayPal 35
2.1 General characteristics of the activities of PayPal and its industry 35
2.2 The mechanism of functioning of the payment system of PayPal 49
2.3 Reasons and mechanism of adaptation of PayPal to foreign developed markets 55
2.4 Assessment of the industry and the company’s expansion strategy into foreign markets of developed countries by the example of the United Kingdom 57
3. Findings and recommendations on the mechanism of adaptation of international digital payment companies to foreign developed markets 67
3.1 Prospects for the development of the payment systems market using blockchain technology and services related to cryptocurrencies on foreign developed markets 67
3.2. Recommendations and implications for PayPal overseas 81
3.3 Limitations of the current research and possible aspects of further study 85
Conclusion 88
References 93
1. Theoretical foundation of the development of international payment systems using blockchain technology and services related to cryptocurrencies 7
1.1 The types of international payment systems and their adaptation on foreign markets 7
1.2 Reasons determining international digital payment companies’ necessity for adaptation on foreign markets with blockchain technologies and cryptocurrency related services 19
1.3 Reasons determining international digital payment companies’ necessity for adaptation on foreign developed markets when expanding abroad with blockchain technology and cryptocurrency related services 31
2. Analysis of the mechanism for introducing international digital payment companies into foreign markets by the example of PayPal 35
2.1 General characteristics of the activities of PayPal and its industry 35
2.2 The mechanism of functioning of the payment system of PayPal 49
2.3 Reasons and mechanism of adaptation of PayPal to foreign developed markets 55
2.4 Assessment of the industry and the company’s expansion strategy into foreign markets of developed countries by the example of the United Kingdom 57
3. Findings and recommendations on the mechanism of adaptation of international digital payment companies to foreign developed markets 67
3.1 Prospects for the development of the payment systems market using blockchain technology and services related to cryptocurrencies on foreign developed markets 67
3.2. Recommendations and implications for PayPal overseas 81
3.3 Limitations of the current research and possible aspects of further study 85
Conclusion 88
References 93
The emergence of internet commerce back in the days gave a powerful impetus to the development of digital payment systems on the internet. Besides of the ordinary plastic debit and credit cards and checks, completely different payment systems began to appear, which were optimized specifically for payments through the internet. Digital money, digital accounts and digital wallets started to appear which in turn served their purpose as digital payment systems.
Due to the accessibility, any person desiring to become an owner of a digital payment account can do so spending minimum effort and time. On August 23, 2021, the largest American payment company PayPal Holdings, Inc. launched its own cryptocurrency service in the United Kingdom. This service previously operated only in the United States. This service does not create or mine cryptocurrency, but allows its users to make purchases and sales transactions with reduced commission using various types of cryptocurrencies.
Digital technologies are among the types of technologies that have the greatest impact on all areas of human life. An example of such digital technology is the blockchain technology, which is relevant to this research. The active development of the cryptocurrency market, as well as its legalization or regulations in the most developed countries, contribute to the growth of interest both in cryptocurrencies, as well as in services that support operations related to cryptocurrencies. Despite the obvious advantages of using cryptocurrencies, there are also risks involved. An example of such risks is the introduction of various bans on transactions in some partner countries or jurisdictions, which in turn determine the relevance of the issue of expanding PayPal services, including to the United Kingdom market.
As an example. significant attention has been paid to the issues of modern problems of the development of international payment systems in Russian Federation by authors such as A.G. Basova, T.A. Zhuravleva, G.V. Petrova, S.F. Sabirov, A.S. Teryaeva, E.S. Ulanova, E.S. Kharitonyuk, I.V. Yablokova and others. Despite having sufficient knowledge on the subject, insufficient attention has been paid to the aspects of implementation, functioning and development of cryptocurrencies and related services in digital payment systems. Achieving the goal of the study is mediated by solving the following main tasks:
- Exploring the essence and types of international payment systems;
- Studying the mechanism of finishing worldwide payment systems using blockchain technology and services related to cryptocurrencies as a new direction of development;
- Exploring the evolution and development of features which are included in the activities of international digital payment companies in the current stage;
- Obtaining throughout information on PayPal as a company;
- Exploring the mechanism and functioning of PayPal’s payment system;
- Evaluating the company’s expansion strategy through expansion into foreign markets of developed countries using the example of the United Kingdom;
- Conducting a comparative analysis of PayPal with other payment systems;
- Identifying the causes and consider the mechanism of adaptation to foreign developed markets;
- Determining the prospects for the development of payment systems using existing technologies such as cryptocurrencies in the United Kingdom;
- Developing a recommendation for PayPal’s expansion strategies overseas;
- Evaluating the effectiveness of the given recommendation;
- Identifying limitations of the current study and determining possible future aspects for further study.
The topic of the study (the research question) is reasons determining international digital payment companies’ necessity for adaptation on foreign developed markets when expanding abroad with blockchain technology and cryptocurrency related services by the example of PayPal’s expansion to the United Kingdom market.
The main goal of the study is to determine these aforementioned reasons (to answer the research question) and to present them to the reader of this report.
The object of the study is the adaptation of international digital payment companies on foreign markets
The subject of the research is the adaptation of international digital payment companies on foreign markets with blockchain technologies and cryptocurrency related services
The case researched in the paper is an analysis of PayPal on the United Kingdom market. The structure of the study includes an introduction, three chapters and a conclusion. The introduction contains a rationale for the relevance of the research topic, the purpose, tasks, object, subject, structure, theoretical, legal, practical basis of this new and unique scientific research. The first chapter of the final qualification work contains a study of the theoretical foundations for the development of international payment systems using blockchain technology and services related to cryptocurrencies.
The second chapter of the study presents an analysis of the mechanism for introducing international digital payment companies to foreign markets using PayPal Holdings Inc. as an example.
The third chapter contains recommendations for improving the mechanism for adapting international digital payment companies to foreign developed markets. All the main findings of the research have been presented in the conclusion to the reader of this paper.
This research has been conducted using scientific research methods. This means that the research methodology on a given topic will be made up of general scientific and special research method which include: analysis, synthesis, generalization, abstraction, analogy, comparison, observation, surveying, measurement, monitoring, modeling and more quantitative methods. Each given methodology is aimed at solving a certain range of scientific research problems.
The theoretical basis of the Master Thesis was the research of both Russian as well as foreign authors in the field of international financial and international economic relations.
The practical basis of the study was the data from the official website of PayPal Holdings Inc. As well as official statistics on the volume and turnover of payment transactions made using international digital payment systems between the years 2018 and 2020. In this research, an updated definition of the term “payment system” has been formulated and a fundamentally new mechanism for the adaptation of international digital payment companies to foreign developed markets has been developed. This makes the research unique, as no other such researches have been done before. The practical significance of this study lies in the possibility of effective practical application of the developed recommendations in the context of the active expansion of PayPal, as well as other similar companies operating in the field of digital payments.
Due to the accessibility, any person desiring to become an owner of a digital payment account can do so spending minimum effort and time. On August 23, 2021, the largest American payment company PayPal Holdings, Inc. launched its own cryptocurrency service in the United Kingdom. This service previously operated only in the United States. This service does not create or mine cryptocurrency, but allows its users to make purchases and sales transactions with reduced commission using various types of cryptocurrencies.
Digital technologies are among the types of technologies that have the greatest impact on all areas of human life. An example of such digital technology is the blockchain technology, which is relevant to this research. The active development of the cryptocurrency market, as well as its legalization or regulations in the most developed countries, contribute to the growth of interest both in cryptocurrencies, as well as in services that support operations related to cryptocurrencies. Despite the obvious advantages of using cryptocurrencies, there are also risks involved. An example of such risks is the introduction of various bans on transactions in some partner countries or jurisdictions, which in turn determine the relevance of the issue of expanding PayPal services, including to the United Kingdom market.
As an example. significant attention has been paid to the issues of modern problems of the development of international payment systems in Russian Federation by authors such as A.G. Basova, T.A. Zhuravleva, G.V. Petrova, S.F. Sabirov, A.S. Teryaeva, E.S. Ulanova, E.S. Kharitonyuk, I.V. Yablokova and others. Despite having sufficient knowledge on the subject, insufficient attention has been paid to the aspects of implementation, functioning and development of cryptocurrencies and related services in digital payment systems. Achieving the goal of the study is mediated by solving the following main tasks:
- Exploring the essence and types of international payment systems;
- Studying the mechanism of finishing worldwide payment systems using blockchain technology and services related to cryptocurrencies as a new direction of development;
- Exploring the evolution and development of features which are included in the activities of international digital payment companies in the current stage;
- Obtaining throughout information on PayPal as a company;
- Exploring the mechanism and functioning of PayPal’s payment system;
- Evaluating the company’s expansion strategy through expansion into foreign markets of developed countries using the example of the United Kingdom;
- Conducting a comparative analysis of PayPal with other payment systems;
- Identifying the causes and consider the mechanism of adaptation to foreign developed markets;
- Determining the prospects for the development of payment systems using existing technologies such as cryptocurrencies in the United Kingdom;
- Developing a recommendation for PayPal’s expansion strategies overseas;
- Evaluating the effectiveness of the given recommendation;
- Identifying limitations of the current study and determining possible future aspects for further study.
The topic of the study (the research question) is reasons determining international digital payment companies’ necessity for adaptation on foreign developed markets when expanding abroad with blockchain technology and cryptocurrency related services by the example of PayPal’s expansion to the United Kingdom market.
The main goal of the study is to determine these aforementioned reasons (to answer the research question) and to present them to the reader of this report.
The object of the study is the adaptation of international digital payment companies on foreign markets
The subject of the research is the adaptation of international digital payment companies on foreign markets with blockchain technologies and cryptocurrency related services
The case researched in the paper is an analysis of PayPal on the United Kingdom market. The structure of the study includes an introduction, three chapters and a conclusion. The introduction contains a rationale for the relevance of the research topic, the purpose, tasks, object, subject, structure, theoretical, legal, practical basis of this new and unique scientific research. The first chapter of the final qualification work contains a study of the theoretical foundations for the development of international payment systems using blockchain technology and services related to cryptocurrencies.
The second chapter of the study presents an analysis of the mechanism for introducing international digital payment companies to foreign markets using PayPal Holdings Inc. as an example.
The third chapter contains recommendations for improving the mechanism for adapting international digital payment companies to foreign developed markets. All the main findings of the research have been presented in the conclusion to the reader of this paper.
This research has been conducted using scientific research methods. This means that the research methodology on a given topic will be made up of general scientific and special research method which include: analysis, synthesis, generalization, abstraction, analogy, comparison, observation, surveying, measurement, monitoring, modeling and more quantitative methods. Each given methodology is aimed at solving a certain range of scientific research problems.
The theoretical basis of the Master Thesis was the research of both Russian as well as foreign authors in the field of international financial and international economic relations.
The practical basis of the study was the data from the official website of PayPal Holdings Inc. As well as official statistics on the volume and turnover of payment transactions made using international digital payment systems between the years 2018 and 2020. In this research, an updated definition of the term “payment system” has been formulated and a fundamentally new mechanism for the adaptation of international digital payment companies to foreign developed markets has been developed. This makes the research unique, as no other such researches have been done before. The practical significance of this study lies in the possibility of effective practical application of the developed recommendations in the context of the active expansion of PayPal, as well as other similar companies operating in the field of digital payments.
Payment systems are an integral part of the money circulation system and a legally regulated type of economic activity, which consists of organizing cashless payments between entities by creating and ensuring the smooth operation of an automated mechanism for conducting payment transactions, including the use of specialized tools and systems, as well as banking procedures in order to maximizing the efficiency of economic activity of economic entities. These procedures and activities are subject to strong regulation worldwide in individual ways in individual countries and therefore require the payment systems to adapt to the laws and regulations of the country where it wishes to operate.
Payment systems, being part of a modern information and telecommunication system, are continuously improved, adapted, modified and transformed into new products that most fully meet modern requirements for making fast settlements between economic entities, as well as creating conditions for obtaining new types of income. Cryptocurrencies are a new phenomenon of the modern world payment systems. The issue of state recognition of cryptocurrency is currently open. Thus, some countries have recognized cryptocurrency as a monetary unit with an appropriate legal status, others either have not decided on the legal status, or consider cryptocurrency not as a means of payment, but as a declared property. This means again that payment systems who want to work with cryptocurrencies and blockchain technology must keep the legal statuses of cryptocurrencies in the given countries in mind and adapt to the situation in that market when planning to operate there. Despite this, the payment system using cryptocurrency is actively developing, modifying the markets of related payment systems, developing new areas and types of services.
Cryptocurrencies today are at the center of the topic of digitalization of the economy. The initial consolidation as a payment service, supported by the objective value created by blockchain technology, gave reason to consider them as the latest stage in the digital evolution of money. In addition, the objective processes of digitalization of the economy, as well as a number of objective advantages of cryptocurrencies over fiat money, could mean that a certain blockchain currency can become the basis of the economy of the future, where all payments will be carried out on a single distributed network, and serve not only as a means of payment, savings and measure of value, but at the same time a tracker of the entire management system which again must adhere to given laws and regulations (requiring adaptation) but at the same time be competitive.
PayPal is an American company and the largest debit electronic payment system. In addition to simple payment for goods and services on the Internet, using the PayPal service, full-fledged payment and settlement operations and operations related to the storage of funds on the accounts of the payment service are carried out. An important area that allowed the company to significantly expand in the European market are operations with cryptocurrency. The COVID-19 pandemic positively impacted PayPal's financial results in 2020.
PayPal is the world leader in electronic payment systems, and the main feature and advantage of the company is its globality, which is important given the current trend in the world in which globalization has been taking place in the past years. The development of the digital asset market and PayPal’s adaptation to this worldwide and local trend in order to stay competitive, has contributed to the emergence of a new feature on the platform. The mobile and online payment system allows users to buy, sell and hold cryptocurrencies. The demand for cryptocurrencies and the simplification of procedures for buying and selling through PayPal’s service allowed the company to successfully develop this area and even enter foreign markets with it. The United Kingdom has become a strategically important market for the cryptocurrency trading company.
The United Kingdom cryptocurrency market is the most suitable for the expansion of PayPal’s payment system, since cryptocurrency is an important area of investment in the country and PayPal is adapting to this local endeavor. High market growth rates, as well as a generally positive attitude towards cryptocurrency on the part of holders and the entire adult population, are an important motive for the introduction of PayPal’s services for cryptocurrency transactions, meaning that PayPal adapted its offer of products on this market. An important aspect in this case are the risks, so in connection with the active development of the cryptocurrency market in the United Kingdom, there are risks of a regulatory nature to which the company has to adapt and has to deal with. If PayPal would not adapt to the competitive, regulatory and legislative nature of the market that it plans to expand to or operate in, the company will face a risk of being outcompeted, punished legally or even to be banned in that particular country, therefore adaptation is key to expanding abroad with financial services and especially with cryptocurrency and blockchain technology related services.
The reasons for the expansion of this service of PayPal to the United Kingdom market is the active development of the cryptocurrency market and the high prospects for its growth in the future (hence forward why it can be concluded that PayPal is adapting to a worldwide occurring trend). At the same time, through the territorial expansion of the service, the company seeks to expand the market, increase revenue, be the first to occupy a new market niche, and significantly increase the global market share. Entering the market requires the development of a marketing strategy that is adapted to the competitive and legislative situation on the target market. At the same time, information messages in the accounts of existing users and active online advertising should be considered as the main promotion tools.
It can be concluded, that Reasons determining international digital payment companies’ necessity for adaptation on foreign developed markets when expanding abroad with blockchain technology and cryptocurrency related services by the example of PayPal’s expansion to the United Kingdom market are:
- Supply and demand of the blockchain technology and cryptocurrency related services in the target market;
- Consumer’s attitudes towards cryptocurrencies and blockchain technology;
- Prospects for growth of market share and turnover in the future
- Internal technological factors and capabilities of the expanding international digital payment company;
- Financial situation of the international digital payment company;
- Brand awareness of the international digital payment company;
- Legal status of cryptocurrencies and blockchain technology in the given foreign developed market and the level of regulations;
- The feasibility to adapt to and work with legal barriers in the given foreign developed market;
- The potential of the issuance of a central bank digital currency in the given foreign developed country;
- Level of potential future legislative and regulative risks in the foreign developed market;
- Possible competitive advantage that can be gained by successfully adapting to and expanding to a given foreign developed market, including first movers advantage;
- Level of competition in the market and the need to adapt to the competitiveness of the market.
Payment systems, being part of a modern information and telecommunication system, are continuously improved, adapted, modified and transformed into new products that most fully meet modern requirements for making fast settlements between economic entities, as well as creating conditions for obtaining new types of income. Cryptocurrencies are a new phenomenon of the modern world payment systems. The issue of state recognition of cryptocurrency is currently open. Thus, some countries have recognized cryptocurrency as a monetary unit with an appropriate legal status, others either have not decided on the legal status, or consider cryptocurrency not as a means of payment, but as a declared property. This means again that payment systems who want to work with cryptocurrencies and blockchain technology must keep the legal statuses of cryptocurrencies in the given countries in mind and adapt to the situation in that market when planning to operate there. Despite this, the payment system using cryptocurrency is actively developing, modifying the markets of related payment systems, developing new areas and types of services.
Cryptocurrencies today are at the center of the topic of digitalization of the economy. The initial consolidation as a payment service, supported by the objective value created by blockchain technology, gave reason to consider them as the latest stage in the digital evolution of money. In addition, the objective processes of digitalization of the economy, as well as a number of objective advantages of cryptocurrencies over fiat money, could mean that a certain blockchain currency can become the basis of the economy of the future, where all payments will be carried out on a single distributed network, and serve not only as a means of payment, savings and measure of value, but at the same time a tracker of the entire management system which again must adhere to given laws and regulations (requiring adaptation) but at the same time be competitive.
PayPal is an American company and the largest debit electronic payment system. In addition to simple payment for goods and services on the Internet, using the PayPal service, full-fledged payment and settlement operations and operations related to the storage of funds on the accounts of the payment service are carried out. An important area that allowed the company to significantly expand in the European market are operations with cryptocurrency. The COVID-19 pandemic positively impacted PayPal's financial results in 2020.
PayPal is the world leader in electronic payment systems, and the main feature and advantage of the company is its globality, which is important given the current trend in the world in which globalization has been taking place in the past years. The development of the digital asset market and PayPal’s adaptation to this worldwide and local trend in order to stay competitive, has contributed to the emergence of a new feature on the platform. The mobile and online payment system allows users to buy, sell and hold cryptocurrencies. The demand for cryptocurrencies and the simplification of procedures for buying and selling through PayPal’s service allowed the company to successfully develop this area and even enter foreign markets with it. The United Kingdom has become a strategically important market for the cryptocurrency trading company.
The United Kingdom cryptocurrency market is the most suitable for the expansion of PayPal’s payment system, since cryptocurrency is an important area of investment in the country and PayPal is adapting to this local endeavor. High market growth rates, as well as a generally positive attitude towards cryptocurrency on the part of holders and the entire adult population, are an important motive for the introduction of PayPal’s services for cryptocurrency transactions, meaning that PayPal adapted its offer of products on this market. An important aspect in this case are the risks, so in connection with the active development of the cryptocurrency market in the United Kingdom, there are risks of a regulatory nature to which the company has to adapt and has to deal with. If PayPal would not adapt to the competitive, regulatory and legislative nature of the market that it plans to expand to or operate in, the company will face a risk of being outcompeted, punished legally or even to be banned in that particular country, therefore adaptation is key to expanding abroad with financial services and especially with cryptocurrency and blockchain technology related services.
The reasons for the expansion of this service of PayPal to the United Kingdom market is the active development of the cryptocurrency market and the high prospects for its growth in the future (hence forward why it can be concluded that PayPal is adapting to a worldwide occurring trend). At the same time, through the territorial expansion of the service, the company seeks to expand the market, increase revenue, be the first to occupy a new market niche, and significantly increase the global market share. Entering the market requires the development of a marketing strategy that is adapted to the competitive and legislative situation on the target market. At the same time, information messages in the accounts of existing users and active online advertising should be considered as the main promotion tools.
It can be concluded, that Reasons determining international digital payment companies’ necessity for adaptation on foreign developed markets when expanding abroad with blockchain technology and cryptocurrency related services by the example of PayPal’s expansion to the United Kingdom market are:
- Supply and demand of the blockchain technology and cryptocurrency related services in the target market;
- Consumer’s attitudes towards cryptocurrencies and blockchain technology;
- Prospects for growth of market share and turnover in the future
- Internal technological factors and capabilities of the expanding international digital payment company;
- Financial situation of the international digital payment company;
- Brand awareness of the international digital payment company;
- Legal status of cryptocurrencies and blockchain technology in the given foreign developed market and the level of regulations;
- The feasibility to adapt to and work with legal barriers in the given foreign developed market;
- The potential of the issuance of a central bank digital currency in the given foreign developed country;
- Level of potential future legislative and regulative risks in the foreign developed market;
- Possible competitive advantage that can be gained by successfully adapting to and expanding to a given foreign developed market, including first movers advantage;
- Level of competition in the market and the need to adapt to the competitiveness of the market.
Подобные работы
- Reasons determining international digital payment companies’ necessity for adaptation on foreign developed markets when expanding abroad with blockchain technology and cryptocurrency related services by the example of PayPal’s expansion to the United Kingdom market
Магистерская диссертация, финансовый менеджмент. Язык работы: Английский. Цена: 5770 р. Год сдачи: 2022