How PayPal is making more of Facebook's platform

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The people at Venmo don't call data "data," according to Bill Scott, a vice president at the PayPal subsidiary.

"The transactions on the Venmo database are called stories," said Scott, describing how Venmo has used social interaction to make it one of PayPal's big successes, boosting earnings and guiding PayPal's strategy in ways that go far beyond a millennial P-to-P app. "It's all about money as a story. More than a transaction but an experience to remember."

"Venmo is part of the experience," Scott added. "People talk about it in a personal way, almost like it's human."

PayPal wants its main brand to get the same treatment, though it hasn't been shy about giving the spotlight to Venmo where appropriate. Venmo achieved its status by designing its interface like that of a social network. PayPal's version of that comes from Facebook.

In the past few weeks, PayPal has begun supporting invoices and P-to-P transfers via Facebook's Messenger. As with Venmo, the structure places transactions into a personalized narrative — a story. In doing so, PayPal aims to capture an audience that may not get the appeal of the Venmo app but still interacts regularly over social media.

"People have this need in their lives that may involve billing or a payment," Scott said. "If you can be part of that fabric in a frictionless manner, that builds the brand."

In both use cases, PayPal was able to use Messenger's open platform to quickly build out the services—interns partly build the social invoicing tool, said Scott, who is also PayPal's leader of global consumer engineering, identity product and engineering.

It's a far cry from five or six years ago when technology deployments were more focused on siloed applications to power specific functions, according to Scott.

Scott brought two parts of his background into the Messenger collaborations—his past as an employee of Netflix, which relies heavily on partnerships, and his time running PayPal's next-generation commerce team.

"It's a small team of about 10 people who are really good at getting products out live to customers," said Scott, adding that fast-paced approach along with partnerships has fed a broader transition in PayPal's goals for how consumers engage the company. "We have turned the corner from getting everyone to come to a PayPal property to us reaching people where they are."

Reaching into other venues to serve consumers is part of what's usually called "contextual commerce," such as placing "buy" buttons into online ads or social media sites, or adding messaging capabilities to payments. Samsung is reportedly also considering a social feed for Samsung Pay, according to a patent filed in Korea.

The strategy is popping up in lots of ways in the retail industry. Airbnb just this week added a way for group travelers to split and make payments inside of a trip reservation, for example. And Uber has embedded itself into hotel booking and restaurant reservation apps.

At PayPal, the Messenger invoicing strategy is a way to add a billing function closer to the point of a service's planning or discussion. It's also a nod that people use Facebook's website more than PayPal's. "We tend to think people spend more time with our products and features than they do," Scott said.

PayPal did not disclose usage of its Messenger integrations, and Facebook did not answer a request for comment by deadline. PayPal first implemented a "buy button" option within Facebook in 2016 and Messenger, which is run by former PayPal President David Marcus, has been steadily enhancing its own retail capabilities, such as by adding customer service for other companies.

"I think [PayPal's] exactly right," said Thad Peterson, a senior analyst at Aite Group. "The only people who care about payments are people like us who work in the business. Payments are an enabler of commerce and commerce is inevitably a dialogue between a buyer and a seller."

The dialogue is what facilitates the purchase and it can reinforce the decision before, during and after the transaction, Peterson said. "Payments are plumbing, and when they allow the dialogue to happen without making the transaction more difficult, it’s an immediate win for the merchant. "

Messenger's bots are also a good fit for payments, given the technology's ability to embed within experiences such as travel, shopping and business. That can position PayPal as part of the delivery of these experiences rather than simply a processor, according to Scott.

"We used to say at Netflix that we connected people to movies they love," he said. "They don't love me, they love the experience that Netflix is giving them."

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