Merchants have an appetite for mobile technology, but they don't always know how to feed their hunger, according to PayPal's Brad Brodigan.
PayPal, which is preparing to separate from eBay this year, sees this issue as an opportunity for it to address as an independent company.
"Merchants want to utilize mobile technologies to connect with their shoppers and buyers, but they don't necessarily know how to utilize mobile to make that connection between the online and offline," said Brodigan, the vice president of retail for PayPal, during a recent interview.
The company hopes its own transformation will allow it to evolve from a "pay" button to a centralized, constantly updating menu of options that allow merchants to quickly add different features. These options will come through an almost constant schedule of product deployments addressing e-commerce, search engine optimization, security and cross-channel business management all without installing new equipment for each project.
"We can roll out new payment sources without a new integration, and that's more powerful," Brodigan said. "We want to be able to 'future proof' merchants as more payment instruments become available and more features and functions become available."
At the center of this transformation is a set of technology tools that PayPal invested more than $1 billion to acquire over the course of several years. This strategy was fed by its acquisitions of Braintree and Paydiant, which provide tools that are designed to be open, sharable and reusable as business conditions change.
PayPal wants to change the perception that it is primarily "a way to pay on eBay," Brodigan said.
Already, PayPal has integrated with the e-commerce platform Bigcommerce to make it easier for merchants to add PayPal's One Touch identification technology and access PayPal's Braintree software development tools to add other features.
PayPal was founded in 1998 and purchased by eBay in 2002. Its pre-eBay years were in the "dot com" era, which was another period of fast change. The company's mission was to provide consumers an easier way to transact with each other than traditional banks could provide. Now, that thinking is being applied to merchants as well.
To this end, PayPal must convince the market that it's a better option than not only banks, but also Apple, Android and other emerging payment platforms.
"What we're seeing now with the digitization of payments is the chance to disrupt the front and the back of the payment system," Brodigan said.
PayPal's strategy is to demonstrate that it can adapt to the ongoing changes merchants face in technology and fraud trends. "For a long time the rate of change in payments was some innovation every few years," Brodigan said. "With the migration to digital we are seeing new features and innovation on a monthly or a quarterly basis."
PayPal faces pressure from Apple and Google, particularly for a share of the in-app payments supported by Apple Pay and Android Pay, said Rick Oglesby, head of research for Double Diamond Payments Research. PayPal has some advantages in this fight, according to Oglesby, who said Android Pay and Apple Pay don't address in-browser payments, which represent the lion's share of e-commerce purchases.
"PayPal and Braintree are heavily focused on One Touch, a solution that can closely replicate the user experience of Apple and Android Pay, that also has the advantage of being able to cross over between in-browser and in-app payments," Oglesby said.
Overall, PayPal has big opportunities, Oglesby said. Through its two consumer brands, PayPal and Venmo, it can enroll consumers as a rapid pace, and Braintree's technology enables these consumers to access payment tools anywhere they go online
"Over time, it's likely that PayPal will further enable those consumers to pay in-store starting with mega retailers," he said. "PayPal has strong strategic assets to play in every part of the payment ecosystem, and Braintree has made them all a bit stronger."