PayPal’s Ready On Mobile Payment’s True Potential

“It is not about changing the swipe or dip to a tap; it’s about using a [smart]phone to do things that you could not otherwise do.”

In a nutshell, that’s what PayPal Chief Operating Officer Bill Ready said is both the problem with and the path forward for in-store mobile payments.

The in-store commerce experience has been in need of a digital upgrade for a long time. Who hasn’t suffered through the pain and agony of finding a parking space at the mall during the holidays only to discover that the item you wanted to buy was out of stock? Or got stuck in a long line of customers with only one sales associate checking people out?

To name but two.

Among the problems consumers face in-store, no one seemed to complain about how they paid for the things they bought when there. The exhausted holiday shopper didn’t hate going to the mall because she had to swipe a card to buy stuff, and the line languisher didn’t get angry because they had to use a chip card to dip and pay.

Because that part works fine.

Bill Ready said that makes the future of in-store mobile payments all about finding better ways to solve for the problems consumers do have when they shop there. And it’s also where he sees innovation flourishing. Consumers, he said, empowered by their eCommerce experiences and the transparency and flexibility that comes with it, won’t tolerate the things they don’t like when they shop in stores. And commerce as a whole, he said, needs to rewrite how it functions across all channels to meet those changing consumer requirements.

“We are starting to see consumers demanding things like order ahead or buy online, pick up in-store,” Ready said. “And merchants now know that they have to do something about it. Unfortunately, there’s a big gap between where many of them are today and where they need to be.”

It’s Not a Sideshow, It’s Survival

Among the experiences consumers don’t want, Ready said, is one where they have to work too hard to pay for something they want to buy. In an increasingly digital world, capturing credentials everywhere that a consumer shops is a huge consumer pain point. And in the endless aisle of the internet, consumers have plenty of options when faced with entering account credentials for the nth time. Including, Ready observed, Amazon, where consumers can make their purchase in one click.

“People default to Amazon because it’s easy to check out.” Ready said. “But putting a merchant-branded ‘one-click’ button on their site doesn’t solve their online problems,” adding that merchants then have to worry about acquiring users, putting new fraud controls into place and managing authentication at the same level of excellence as the biggest commerce players in the world.

And, he noted, doing all of that across operating systems and platforms — and, increasingly, connected devices.

Getting consumers to complete a purchase online, Ready said, isn’t about asking the consumer to do more — provide more data, download another app — but to offer them more — a better and more secure shopping experience — while requiring they do less to get it.

Something that, he said, is increasingly true as commerce channels converge.

The Digitized Real World of Shopping

Once upon a time – and not that long ago, Ready said — merchants regarded showrooming as a bad thing. Showrooming was the act of looking at an item in a physical store and then buying it online later (or, sometimes, right then and there) in order to save a few bucks. In 2012, nearly 46 percent of consumers reported going to a store to look at a product, only to buy it online cheaper, and merchants complained about losing sales.

What a difference just five years makes.

“Now, merchants want to use their physical storefronts to their advantage — as showrooms,” Ready remarked. “What we’ll start to see is merchants designing experiences that get consumers into the store to meaningfully interact with their products so that they can buy them easily right then and there.”

Buy online and pick up in-store, Ready said, is an important first step that brick-and-mortar merchants have made in leveraging an important advantage that most online merchants don’t have: immediacy and instant gratification. Ready said that the big question — or opportunity to be harnessed now — is how brick-and-mortar retailers can expand that engagement by using their “showrooms” to expand their interaction with those consumers. Studies show that 30 percent of consumers buy more when they buy online and then go to the store to pick up their goodies, something that Ready said only scratches the surface of what merchants hope to achieve.

Doing that, Ready said, will mean that merchants must look beyond the “here’s my app — go download it” way of thinking. The danger in building it and hoping that consumers will come is that they probably won’t. Consumers aren’t that interested in having more mobile apps on their phone, and they download fewer than one per month, which sounds to us like they download zero. Instead, Ready said merchants will want to explore the use of technology to fix the part of the online-to-offline experience that consumers don’t like or don’t want to do.

One example, Ready said, are beacons. Beacons aren’t nearly as powerful at the register as they are on endcaps in stores, where he emphasized they can create new points of customer engagement that prompt a purchase.

The P2P Play  

The shift to mobile and digital, Ready said, extends to P2P payments, where he said Venmo rightfully gets its fair share of attention for its P2P prowess, given its impressive growth rate particularly among millennials and their immediate inner circles.

And while Ready said that PayPal couldn’t be happier at the props Venmo receives, it does have the unexpected downside of overshadowing PayPal’s overall P2P prowess.

“P2P is about 20 percent of PayPal’s TPV [total payment volume],” Ready said, adding that it’s a massive global business that serves a lot of use cases beyond paying friends back for spotting them $15 for dinner.

Those use cases, Ready noted, evolve as the needs of their users do. Millennials in their twenties who use P2P payments to split an Uber ride aren’t growing into 38-year-olds who do the same thing. Instead, they’re using PayPal to pay the babysitter, dog walker or landscaper.

Or using PayPal to buy a massive bin of LEGOs from a community yard sale page they found on Facebook.

These transactions, Ready said, are technically transactions between people, but, unlike Venmo, they aren’t necessarily between people who know each other socially. PayPal, he noted, has additional features baked into those P2P transactions that can protect the buyer from doing business with someone they may not know. In those situations, buyers, Ready said, can check a box that confirms they are purchasing goods or services from that seller and are automatically enrolled in PayPal’s Purchase Protection for Buyers program.

“When you’re transacting with individuals outside your friends and family group who are selling something, those transactions become very much about fraud protection,” Ready noted. “Otherwise, it’s very much like handing someone cash. If the seller turns out to be fraudulent, the buyer has no recourse.”

It’s one of the big reasons that Ready said PayPal has so much P2P volume across its platform, especially across borders. PayPal was built from the ground up to deal with buyers and sellers of all kinds who may also need protection against bad actors.

“The world of transactions happening cross border are not just exchanges of money between friends, but goods and services,” Ready emphasized.

That foundation, Ready said, is how PayPal and its portfolio of digital commerce options is able to power the growing world of small transaction commerce between buyers and sellers on platforms like Facebook, craigslist or Instagram. And enable those transactions regardless of what smartphone a person may be using to initiate the transaction or knowing whether the bank account they’re sending funds to is part of a particular network.

It’s that same outlook, Ready noted, that forms the basis for how PayPal is taking on mobile payments.

“We bring the power of a global commerce network to any merchant — the biggest of the big and the mom who’s selling secondhand baby clothes on Facebook’s Marketplace — and any buyer,” Ready said. “We continually add new features and embed new technologies into our network to make it easy for anyone who wants to conduct commerce. Our goal is to use the power of our network and digital commerce operating system to democratize commerce for everyone, everywhere.”