Overall, last week wasn’t the best of weeks for PayPal (PYPL) in the market. However, for Google, things went swimmingly. In fact, if you take a look at the news surrounding the two companies, you’ll see that Google (GOOG) was the reason that PayPal took a dive. Below, we’ll talk about how Google hit PayPal where it hurts, what this means for PayPal moving forward, and what binary options traders should be watching for ahead.

How PayPal Makes Its Money

Before we get into detail about how Google hit PayPal where it hurts, it’s important that you understand just how PayPal makes its money. You see, PayPal is an online merchant account. This means that the service is used to transfer money from one person or entity to another. In the process, the company charges fees. In fact, the cost to transfer money on PayPal is 2.9% of the transaction, no matter how much money is transferred. This transfer fee is where PayPal generates revenue, and therein lies the issue.

How Google Hit PayPal Where It Hurts

While PayPal is definitely the leader in online money transfers, Google has been working to get in the game for some time now. Remember Google Wallet? Well, Google just recently made what could be the move that brings it into the industry in a big way. You see, Google just launched a new feature on its email app for Android, allowing users in the United States to receive or request money as an email attachment. The service comes with absolutely no fees to either party and can work even if the payor or payee doesn’t even have a Gmail account.

That’s a swift kick to PayPal. Not only does this challenge the company’s Venmo app in the mobile space, it challenges the structural integrity of the company from the guise of a competitive advantage. At the end of the day, with this free feature from the Gmail app, more and more people will likely choose to use Google’s Service over PayPal’s service, causing pain for PayPal with regard to user growth.

What This Means For PayPal Moving Forward

At the end of the day, this is a massive hit to PayPal. The truth is that the company has controlled the online money transfer industry with very little push back from competition. However, the tides are changing on the competition scale, and as these tides continue to change, PayPal is going to have to become more innovative in order to maintain its position as the top-dog in the sector.

What Binary Options Traders Should Be Watching For Ahead

Moving forward, chances are that PayPal and Google will generate several strong opportunities for binary options traders. However, if you’d like to take advantage of these opportunities, you’ll have to pay attention to the news. In particular, on the PayPal side of things, continue to watch the growing competition in the sector incredibly closely as this will continue to sway the stock. On the Google side, watch the company closely as it continues to innovate new products, features, and services. Ultimately, as innovation continues, new products and features are likely to continue driving strong movement upward for the company.

[Image Courtesy of Wikimedia]