It’s a deal that hits some of the most important payment-related hotspots: Online marketplaces. Localized currencies. Global payout services. The gig economy. Expanded eCommerce ecosystems.
The deal announced late Tuesday (June 19), the one where PayPal buys Hyperwallet for $400 million, not only creates a company that will have significantly increased power in all facets of online retailing, but also adds end-to-end payments strength that promises to develop in ways not yet considered. That’s according to Juan Benitez, the general manager of PayPal-owned payment processor Braintree, during an interview late Tuesday with Karen Webster.
The view from his seat on Tuesday was a PayPal that is “powering all the capabilities in the eCommerce ecosystem, a company with amazing service, an amazing end-to-end payments company” with a lucrative API.
Gig and Freelance Payments
A look at some of Hyperwallet’s recent moves gives a good idea of why he has that outlook. In March, for instance, Hyperwallet signed a deal with Lyric Financial to enable faster and more efficient royalty payment advances to recording artists working on TuneCore. That might seem like relatively small — or specialized — potatoes when it comes to the wider world of payments, but the deal addresses one of the common and longstanding complaints from the artists and behind-the-scenes workers who drive the music industry.
That deal also reflects the increasing importance of gig and freelance work to the larger economy — a market where payments companies are striving for bigger shares. As the PYMNTS Gig Economy Index showed, nearly 40 percent of the American workforce now makes at least 40 percent of their income via gig work, and those jobs have gone far beyond rideshares and the like.
The development of gig work into a meaningful, vital source of income was a topic of discussion last year in an interview that Hyperwallet CEO Brent Warrington did with Webster. “Today, it’s supplemental income, but I think we’ll see more and more individuals relying on gig opportunities as their primary income,” he said. “People can earn their necessary household income exclusively through a sort of independent economy.”
And that presents opportunities for companies such as Hyperwallet — and, now, for PayPal.
“Most traditional payroll systems go geography to geography. If you are a global employer, you contract a different payroll provider for employees in different geographies to handle specific currencies,” Warrington said. “Now, we’re seeing individuals receive payments of irregular amounts and different currencies every week. It’s important for us to be able to put all that in the stew and still pay people quickly.”
The payment service providers in that market must win the trust and loyalty of gig and freelance workers, and employers. In the case of Lyric Financial, Hyperwallet’s proprietary financial network has made it easier to send local, low-cost bank transfers to recipients in nearly a dozen countries, including India, Russia, Brazil and Indonesia.
Not only can Hyperwallet help PayPal “augment (capabilities) on the payout side,” Benitez told Webster, but “we truly believe that Hyperwallet is a leading global platform in terms of the versatility they bring, the reach they bring and the capabilities they bring.”
Hyperwallet and PayPal’s Future
So what now for Hyperwallet as it moves under the PayPal umbrella? According to Benitez on Tuesday, the acquisition will result in stronger marketplace services and features to keep consumers and suppliers happy, and discourage them from taking their business elsewhere. “It’s a great fit for our two-sided network,” he told Webster. “We have very strong arsenals.”
As for creating additional functions within the PayPal payments worlds, much of that work — the brainstorming, the experimentation, the pilots — will likely start with Braintree and Hyperwallet people getting together, he said. (In fact, Hyperwallet’s Warrington and other company employees will report to Braintree’s Benitez, said PayPal Chief Operating Officer Bill Ready.)
“Brent and I are working on looking at how to use that Hyperwallet toolbox in different merchant segments,” Benitez said. After all, he added, the common goal is “putting money into people’s accounts as they want to.”