Top Ten Cities for Online Small Business According to PayPal

PayPal recently unveiled the Top Ten Cities for Online Small Business in the United States, based on total payment value of it’s current customer base. This is the first time ever that Paypal has revealed such data relative to it’s small business services. The Top Ten list, compiled by the online transactions giant, names Manhattan as the number one city for Small Business and ranks San Francisco in second place and Brooklyn third.  New York has done rather well for itself in the small business game.

Los Angeles, Miami, Chicago, Houston, San Diego, Austin and Las Vegas made up the remainder of the list, giving us all a glimpse into the hubs for small businesses in the United States.

“We process payments so it’s pretty simple. It’s a very objective study because it’s the top ten online small business cities,” says Anuj Nayer, Senior Director of Global Initiatives at PayPal. “We can process the payment volume by zip code and that gives us a very clear understanding.”

With Manhattan coming away as number one with the highest level of small business activity in the US, it raises the question of what types of businesses are making these waves. “There’s a lot of online commerce that happens there as well as regular commerce,” says Anuj. “We’re not breaking down the split between Manhattan and San Francisco, which is the second one. We were surprised at how much of the total that the top ten make up. It’s everything from bespoke clothing manufacturers to electrical retailers.”

Leo Sussan is a marketing and business development associate at Shoplet.com, an office supply company based in Manhattan that frequently uses PayPal as a payment option for customers. “Manhattan provides start-up and emerging companies with increased visibility, available capital, and a massive potential customer/employee pool in the New York metropolitan area,” he says, referring to the large population.

Manhattan is the heart of companies big and small that have headquartered there and this causes a number of difficulties at the same time. “Manhattan is not the most affordable of locations for one to simply start up a new business. Retail and office space is very costly in New York,” says Leo. “Manhattan is ultra-competitive; the race to prove one’s resilience and luminosity is infinite. But for those whom do manage to attract their deserved nods of recognition, the setbacks of starting up are ultimately worth it.”

“Small business is really the bread and butter, the DNA, the core of PayPal’s business. It’s always been small businesses,” says Anuj. “Pretty much anyone with an idea can put up a website and in a very short amount of time have PayPal on their site.”

Sometimes what’s best for small business in a particular city can be long established industries creating chances for newer ones.  Los Angeles featured fourth on PayPal’s list and the showbiz core has been instrumental for film, games and multimedia company Summertime Entertainment, another regular user of PayPal services, which assists their worldwide activities. “Paypal allows us to easily provide a secure and familiar payment method for our global player base of 300,000 players that are located in over 90 different countries for our children’s virtual world Legends of Oz World,” says Director of Digital Media, Brad Jashinsky.

“The main advantage of being located in Los Angeles is the talent pool here for the entertainment industry,” he adds. “Los Angeles has everything from entertainment focused programs at major universities to hosting most of the leading industry conventions.”

While we’ve been looking at PayPal’s efficiency for small business across the US, it’s vital to note the growth in international transactions happening all the time via American businesses, a set of circumstances made possible by larger companies like PayPal.

As Anuj explains, one of the fastest growing countries for cross border transactions is Argentina, which is experiencing triple digit growth on cross border. “We think that’s an excellent opportunity for small merchants to start to target these customers that may not be in the traditional boundaries in the US, especially as you start getting into things like Black Friday,” he says.

“Every merchant is going to start offering deals to their domestic consumers, it’s a very traditional part of the retail calendar but if they’re not offering these deals to customers that live outside of the US then they’re cutting off 95% of the potential sale. You’re not just competing now with the stores that are around the corner or even in a domestic market, you’re competing with everyone around the world and consumers from around the world are finding it easier and easier to shop cross border,” he adds.

The volume of businesses that are using PayPal in day-to-day operations indicate that it will be remaining a giant in the field of online transactions. However, it does not exist alone. As we’ve seen earlier, companies like Bill.com have created more options for small business and online transactions but still not quite having the same global reach as PayPal.