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Small Business Growth in Europe

Digitization is Enabling EU SMEs to Expand Globally

European small businesses play a central role in the EU economy. They add jobs, stimulate growth and build communities. Small and medium enterprises (SMEs) in the EU represent 99% of all businesses and employ two-thirds of the workforce. In the past five years, they have created around 85% of new jobs and provided a path to prosperity for millions of families. The growth of digital commerce provides more opportunities for entrepreneurs to expand across the EU and around the world. However, there remains untapped potential for small businesses as barriers still persist for full global expansion. Whereas the global marketplace used to be the purview of only the largest businesses, digitization is democratizing commerce and changing the calculus of who can fully engage in cross-border trade.

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Research conducted by PayPal in 2017 demonstrated how U.S.-based small businesses were able to grow and trade with the help of digital technology. This paper builds upon the principles of that research, demonstrating that SMEs in the EU are also benefiting from the digital marketplace.

We have analyzed a sample dataset of 157,636 small businesses using PayPal to accept digital payments, across the 28 countries in the EU for a two-year period across 2015 to 2017. For the purposes of this paper, PayPal defines a small business as a merchant selling between $30,000 and $3 million per year. Our research demonstrates that ecommerce and digital enablers like PayPal are allowing small businesses to grow and trade more than ever before.