The launch of PayPals revamped mobile app may demonstrate the company has laid the foundation to become a serious offline payments player by employing strategies that differ greatly from how it achieved success as an e-commerce payments scheme.
In launching the new app in some 125 countries including U.S. versions for iPhone and Android smartphones PayPal acknowledges two realities: it cant win the offline payments business of its more than 55 million U.S. account holders without a large base of physical merchants to accept its wallet, and those consumers wont use the wallet at those merchants if it only replaces their credit cards and cash.
Nobodys actually saying, I want to pay with PayPal. No consumer is desperately saying, I need a digital wallet. That just doesnt happen, says Anuj Nayar, PayPal senior director of global initiatives. What theyre saying is, Ive got a problem that I need to solve, and whatever that problem is, how do the technologies come in underneath it to help fix that? Nayar told ISO&Agent Weekly in an interview ahead of the apps release.
The consumer education message is not, Theres a new way to pay. The consumer education message is, If you pay with PayPal, you get all of these benefits that you dont get any other way, he says.
The app has a new layout for consumers to manage the payment types stored in the digital wallet. PayPal now provides consumers with the ability to apply for a Bill Me Later line of credit from within the app (a function previously available only on its desktop website), and the app continues to enable users add credit and debit accounts with the Card.io card scanning technology it acquired in 2012.
The new app presents all of those functions in a new Wallet tab thats more prominently displayed and requires fewer steps to add, remove and rearrange the payments methods stored in the wallet a change that downplays the spread in merchant fee revenue that PayPal earns between different payment types, and reflects a new attitude about how it will make money in the physical world, Nayar says.
PayPals traditionally had a reputation for pushing you to use your bank account or your PayPal balance. Because we have a different business model now, were less worried about that, and were making it a lot easier to use whatever financing solution you want, he says. Our model is very different from just making money based on the financing differential between utilizing a credit card and balance.
The reality is PayPal is a very successful online payment business These are the seeds to grow the next PayPal, which is some time away, Nayar adds. If we got to 1% of the offline business, PayPal would double in size. The numbers are just that big. So this is the investments were making for that, which are not necessarily the same strategy that took us from 1998 to 2013.
While the redesigned app retains the person-to-person payments and local merchant listing functions of its predecessor, the new user interface relies on an updated graphical look and feel that supplements those features with a more prominent shopping tab that promotes physical stores that accept the PayPal wallet and merchant offers.
This is one of those design philosophies that David Marcus has been driving since he joined. David is fanatical about beautiful products, Nayar says about PayPals president. I think the idea of beauty and design philosophy hasnt been something that people have traditionally associated with PayPal.
Keeping in lockstep with its past offline payments endeavors, PayPal relies on partnerships and third-party integrations to broaden the apps reach. In a parallel to its initiative to get merchants to accept its eBay plastic card by routing transactions across the Discover Network, the new app leverages the Eat24 food ordering portal to connect with restaurants and offer consumers order-ahead and pickup services, using the PayPal wallet to pay for their meals.
Order ahead has really, until now, basically only been in seven Jamba Juice stores in the Bay Area, Nayar says. Right now, thats expanding nationwide and front and center in the app is the ability to do that kind of stuff.
A separate integration with the NCR Mobile Pay website enables pay-at-table from within the app. When a restaurant uses NCRs hospitality point-of-sale terminals and its consumer-facing mobile pay service, diners checks include a QR code that servers can scan to enable users to pay with the PayPal wallet. Receipts are emailed to consumers.
Eventually, the integration will be enhanced to enable diners to order from their phones and send the request directly into the restaurants back-end POS system. It changes the whole nature of the relationship because then your waiters not doing a transaction, Nayar says.