But ten years down the line and Wall Street has branded PayPal as one of the most profitable stocks to invest in the coming decade. And from the major moves they are making in the financial world, it is easy to see why.
PayPal has formed partnerships with both VISA and MasterCard over the past few weeks. Getting a deal with one of the credit companies would have been good, but they managed to get as deal with both. To show you the full perspective of this deal one must understand that VISA and Master Card were great competitors.
The introduction of PayPal as another mode of payment online gave the two heavyweights, even more, competition. So getting both the companies to sign deals with PayPal shows that the companies must have seen incredible and unparalleled potential in PayPal.
"PayPal has always had a mixed relationship with Visa and MasterCard," said Andrs Cardenal, an investment researcher. "Credit card operators charge substantial processing fees on payment transactions, so PayPal used to encourage its customers to link their PayPal accounts directly to their bank accounts via ACH as opposed to credit cards, to avoid paying those fees."
But Paypal's latest move has seen them partner with Facebook. To some extent partnering with credit card moguls made sense, but too many investors not so much Facebook. This led to 2 percent drop in the stalks initially.
But the bigger picture is Facebook has an average of 1.57 billion users monthly. If PayPal can filter these users to become their own, then few companies would be able to compete with them.