Issues

Hundreds of millions of people send and receive international remittances every year. Over 258 million people currently live outside their country of birth. This number is up from 173 million in the year 2000. Sending money back home to family is a part of the social contract many of these migrants make when they leave in search of a better life. Unfortunately, the process for sending and receiving remittances remains archaic and ultimately costs migrants and their families millions of hours and billions of dollars every year.

Canada is a global powerhouse for important trade sectors and the global trade environment is rapidly evolving due to the proliferation of technology, in particular internet and mobile technology. This transformative technology creates opportunities for even the smallest of businesses to effectively reach customers across Canada and around the world. As a global e-commerce ecosystem leader, and a champion for Canadian entrepreneurs, PayPal sees firsthand how digital solutions can help Canadian businesses harness the power of the digital economy to innovate and grow.

Retail financial services were designed for a world where individuals had a handful of fixed salaried jobs over the course of their lives. There is an increasing consensus that this will no longer be the case going forward. Online platform economy, entrepreneurship, socio-demographic shifts, and continued technological advances are rapidly evolving the way in which people work. The future of work presents an opportunity to reimagine the retail financial services ecosystem, institutions, and products. The public and private sector must align around the goal of enabling every worker to lead a financially healthy life in the future.

Small businesses play a critical role in the global economy. Yet many UK entrepreneurs have struggled to get financing to help them develop and grow, a problem that became more acute in the wake of the 2008 financial crisis as retail bank branches closed and those that remained decreased funding to small businesses. However, this study demonstrates how PayPal Working Capital is providing small businesses with access to finance in precisely those places where traditional financial institutions have pulled back.

Across the United States, vast numbers of people, maybe more than we previously realized, have not benefitted fully from globalization. Historically, only the largest businesses in the country could fully reap the benefits of trade. Moreover, businesses that traded were often concentrated in large city centers, often close to the coastline, in order to reduce the distance costs associated with trade. The Internet changes the calculus of who can fully engage in globalization by eliminating traditional barriers like distance, trust, and communication. Breaking down these barriers can enable businesses outside major cities and those located on the coasts to reap the economic benefits of an open economy.

The term "fintech" is often used to describe tech startups that are presumably going to upend traditional financial institutions (ie. Banks) through the use of new technology. Such a characterization, however, misses a large amount of what is truly transforming the financial services ecosystem. At PayPal, we believe that our nearly two decades of experience gives us a strong position to speak about what FinTech really is. This paper is our attempt to provide an insider’s perspective on the potential and the reality of fintech.