Controversial

Why PayPal Leads With Payments

In what is likely one of the more dramatic statements written in history about a software development conference, USA Today reported last week that Google’s I/O developers’ conference was the “latest salvo” in an “escalating arms race” among the Top 5 U.S. tech firms for the “hearts, minds and coding of developers.”

Those “Fab Five,” according to USA Today are Amazon, Microsoft, Google, Apple, and Facebook. And, yes, it certainly has entered overdrive as each of these players are now running up against each other when it comes to payments and commerce. Suffice to say that if either (or both) can be done digitally, one of those “Fab Five” wants to be the engine behind it getting it done.

That sort of isn’t how PayPal sees it – unsurprisingly.

Absent from USA Today’s “Fab Five” list, when asked about the so-called arms race that the USA Today was referring to, PayPal’s GM of Retail, Brad Brodigan, had this to say to MPD CEO Karen Webster: “It’s hard to be in payments as a part-time job.”

Payments – it sounds so easy until you actually try to do it.

Which is likely why, Brodigan told Webster, when one looks at the various “payments” plays being made by tech players, what one is actually seeing is a much more limited engagement in what is actually a very big and complicated ecosystem.

“There really is a difference between using technology as a way to provide a digital identity and using technology to actually facilitate commerce and process payments,” Brodigan told Webster.

When asked to elaborate further, Brodigan noted the distinction as being more about owning the entire process that is payments versus enabling an experience via a digital identity issued by a technology provider.

“If you’re a consumer, you expect that the provider you are using to pay for something both facilitates the payment and owns the process to the end – providing resolutions to any sort of issue as you make the payment,” Brodigan explained. “There are some technology companies that are focused on using their technology as way of simply providing identity by allowing consumers to tokenize their identity on their device and therefore secure it. That doesn’t mean as a consumer you can leverage that partner to fix an issue you have with payment.”

“It’s very different to be an end-to-end payment provider than it is to be an identity technology platform,” Brodigan told Webster.

And that is what PayPal is – and reaffirmed 10 days ago by what the CEO of the soon-to-be-independent PayPal said in San Francisco at a presentation for analysts and customers. A split that Brodigan says has allowed the firm to redefine its vision about providing an entire operating system for commerce. And by so doing offering an expanded value proposition for its merchant partners.

“What merchants are most interested in hearing is how we are redefining PayPal as a standalone,” Brodigan noted when asked about how merchants reacted to what they heard on May 20. “Until now, they really thought about PayPal as an extension of eBay – so they are now hearing about PayPal as the largest and most open digital payments platform.”

Talk of an open platform can sound almost out of place in the current mobile discussion – with big players like Apple, Google and Samsung thinking mostly tribally at this point (and about how to use payments to grow their tribes’ numbers) and interested in making their payments platforms gifts for their loyal adherents to use in their closed (or sort of closed) operating systems-based ecosystems.

PayPal, on the other hand, is thinking about it differently.

“If we are going to help merchants enable commerce, we have to make sure we don’t force them to make choices about what payments they accept. We expect that will include PayPal, but also everything else,” Brodigan told Webster.

And, he noted, with 167 million users, scores of merchants, and a single-minded dedication to payments and payments alone for almost two decades – PayPal feels that they can afford to be open.

“We’re tech agnostic,” Brodigan said. “We see our collection of assets and that allows us to be uniquely positioned as the rate of the disruption traditional to digital payments in accelerating.”

An acceleration, he and PayPal believes is toward a place where customers are getting to the threshold of mobile use – and encountering friction at just the wrong point.

“Our focus is to enable digital payments across form factors adopted by merchants and consumers alike.”

“We’re really seeing merchants connect the dots between online mobile and in store. Consumers are demanding it, but there’s also a chance to have a holistic point of view on their consumer profile,” Brodigan told Webster when asked about how merchants view the mobile payments opportunity. “On the other hand, when they [merchants] start to invest in mobile experiences, they realize there is too much friction.”

“It takes too long for consumers to sign up. It takes too long for consumers to embed in loyalty programs. There is too much friction in the payment experience. They are investing in it, but they aren’t seeing habitual use, so while they are investing, they aren’t seeing adoption because there is too much friction in the system.”

PayPal says their focus – on both the merchant and consumer side, as they are trying to define themselves as a firm on its own two feet – is on eliminating that friction in a way that requires the least possible effort on anyone else’s part (expect theirs). “That means One Touch payments (mobile and Web) so that shopping on the mobile Web is indistinguishable from shopping in app with a tap or a touch [and] is as easy as possible. It means merchants can leverage Paydiant’s technology to channel their inner Starbucks and build that perfect consumer mobile experience,” Brodigan elaborated.

At the end of the day – Brodigan told Webster – PayPal doesn’t want to be the button that makes the purchase – it wants to be the the architecture that makes digital payments possible.

“There is a lot of interest by a lot of companies, most of which who don’t have significant experience in the space,”Brodigan said. “This is a complicated ecosystem, you need lots of support around risk and international currency support. We feel very good about our ability to continue to be the leader in digital payments because we’re the most ready to handle all the moving pieces.”

It’s somewhat interesting that everyone these days wants to put the word “Pay” in the name of their payments product: Apple Pay, Android Pay, Samsung Pay. Yet, “Pay” is always second – maybe because it’s just easy to glop it on at the end or maybe because it helps preserve the existing brand that people know with a word that also reminds consumers that, well, they can also “Pay” sometimes at some places.

For PayPal though – “Pay” is the lead word – because they say that it’s what they do and have always done since Day 1. While its journey to redefine itself as eCommerce’s operating system has as of yet not generated the sort of histrionic headlines the ongoing “arms race” among the “Fab Five” are engaged in, they seem content to be the operating system that enables payment, within any operating system accessed by any form factor enabled by any technology that exists today or might exist going forward in which payment and commerce is a part.

For more news on PayPal, click here.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out the February 2019 PYMNTS Digital Fraud Tracker Report

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