PayPal Holdings, Inc. (NASDAQ:PYPL) is a leading example of what is happening in the economy as the economy goes through the spread of the coronavirus pandemic and the related economic recession.

PayPal’s year-over-year total payment volume rose by 36 percent on a currency-neutral basis. This exceeded its second-quarter performance when total payment volume only increased by 30 percent.

This, to me, represents the future, a future that has been accelerated into the present by the disruptions the economy is now going through.

The near-term future will not be so “expansive” since the past two quarters especially benefitted from the unusual circumstances of the time.

But just because the performance may drop back from the current numbers, this doesn’t mean that investors should be concerned about the future.

The management of PayPal has prepared for the future and seems to be perfectly capable of meeting its competition. Investors should be very interested in this company.

PayPal Is Doing Its Job

Year-over-year, profits more than doubled.

PayPal processed $247 billion in payments in the third quarter. It grew in volume as other competitors, like credit card companies, actually faced a decline in transactions. Actually, the amount of credit card debt fell by $51 billion during the second quarter from a year earlier. The drop in the second quarter of $76 billion was the largest ever.

PayPal also added net new accounts of 15.2 million in the last quarter, as the movement from cash and checks to electronic payments picked up.

The company now has a wallet and peer-to-peer payments app, Venmo, and the value of transactions associated with it rose by 61 percent to $44 billion in the quarter.

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Building Its Product Base

One of the things that PayPal has been criticized for in the past has been the fact that management has just focused on the company’s fundamental payments system. It wanted to make sure that it worked and was all it was meant to be. Management was interested in the quality of the product.

The criticism arose because PayPal’s competitors expanded their product lines and this threatened the hold of PayPal on the market. And, then with movements from such organizations like JPMorgan Chase & Co. (NYSE: JPM) and the Chinese threat, Alipay coming from Alibaba Group Holdings (NYSE: BABA) now associated with Ant Group, analysts expressed concern over whether or not PayPal could keep up with future competition.

It seems that PayPal is keeping up and bringing its concern about excellence along with it.

As Telis Demos writes in the Wall Street Journal, PayPal’s growth

may become less driven by a rising e-commerce tide, and it becomes more important to encourage consumers to choose it over other digital payment methods. Investors should pay attention to the increasing suite of inducements it now offers consumers, such as a brand-new cryptocurrency capability; syncing up Venmo’s wallet and peer-to-peer payments with shopping; discounts via Honey, which helps find coupons for online shopping; online bill payments using digital wallets; and buy-now-pay-later installment offerings.”

PayPal has been investing a lot of money in Venmo and will be pushing it very hard going forward. The company expects it to begin making a positive contribution to its performance in 2021.

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In other words, the company is really building an information platform and network based upon intellectual capital that is consistent with the nature of the “new” Modern Corporation, which I have been writing a lot about.

The hypergrowth may be coming to an end, but the company appears to be in a very strong position, ready to take on the competition it is bound to face in the future.

And, overall, the stock market seems to appreciate this fact.

Shares of PayPal have more than doubled in price from their March lows and are now trading near record highs. The stock now trades on 40 times forward earnings. Competitors Mastercard (NYSE:MA) and Visa (NYSE:V), the two biggest payment processors in the United States, trade on 35 and 27 times earnings. Investors seem to appreciate PayPal’s possibilities.

Speaking Of Ant

I mentioned Ant Group earlier and its connection with the world’s largest payments system, Alipay. Recently, I have written several articles on this company and the role the Chinese payments system might play in world banking and financial circles. The most direct article can be found here.

The Ant Group is planning to move out into the world and had planned to raise $34 billion to support this growth. For now, it looks as if this effort will be put on hold. Jack Ma, co-founder and former chief executive of Alibaba, appears to have offended Chinese officials and, for the time being, the new offering has been pulled from the market.

This situation, I believe, will be resolved very quickly and Mr. Ma will “step into line” with whatever the Chinese authorities want. And, Ant will be back on the move to share its products with the world.

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PayPal Will Be A Player

In my estimation, PayPal will play a very important role in the future of payments systems and in the future of the banking system. The company is a well-run company, the technology is first class, and it will be an alternative to Alipay and other systems. My guess is that it will not play this role independently, but will become a part of some larger organization, one that can help it scale up. But payment systems are the future of banking and finance.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.