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PayPal opens up access to e-commerce platform that's already used by Instagram and Facebook

Key Points
  • The payments giant is launching the PayPal Commerce Platform, an e-commerce system that allows buying and selling and facilitates behind-the-scenes functions like fraud protection.
  • Instagram Checkout and Facebook Marketplace already use the platform, but this extends it to the average seller and merchant.
  • “Sellers are trying to figure out how they can go compete with the very largest online retailers. This is a huge opportunity for them,” says PayPal COO Bill Ready.
A sign is posted outside of the PayPal headquarters in San Jose, California.
Justin Sullivan | Getty Images

PayPal is rolling out a new e-commerce platform that gives small businesses the same access to the online shopping infrastructure as tech giants like Facebook.

The new platform brings together existing parts of PayPal's payments business — letting merchants accept money online and shoppers to check out through PayPal. It also opens up back-end systems like fraud protection, compliance, and authenticating an account, which would be expensive and "almost impossible" for a small start-up to build on its own, PayPal COO Bill Ready said.

"This is a huge and rapidly growing market and we're looking to go enable much more of that," Ready told CNBC in a phone interview. "Sellers are trying to figure out how they can go compete with the very largest online retailers. This is a huge opportunity for them."

Instagram Checkout and Facebook Marketplace are already running on this platform. According to Ready, this is a way to "broaden out" the offering and allow companies more access to the same back-end system that allows someone to shop off of their social news feeds.

"There's all these new places where sellers can go meet a customer," Ready said. "We want to democratize access to that so all these millions of sellers can go engage more customers online."

Partners and online marketplaces are a steady part of PayPal's business, which was once purely e-commerce as the payment option for eBay. On the last earnings call, Ready said PayPal's top 20 marketplaces grew 40% year over year and approached $90 billion in volume last year alone. Ready, former CEO of Braintree, which was later bought by PayPal, said this could also be a way to add to the company's existing 277 million users and 22 million merchants.

PayPal spun off from eBay in 2015 and has since expanded well beyond online checkout. The San Jose, California-based company is leaning into mobile payments, which makes up roughly 40 percent of its business, and small business lending. Its popular peer-to-peer app Venmo, which can also be used in checkout on the commerce platform, now has 40 million users.

The new commerce platform includes other back-end processes like onboarding, payouts and disputes management, AI and machine learning-powered fraud protection. The product will first be available across the United States, U.K. and Europe but over time, but Ready said PayPal plans to expand to all other markets where they operate.

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