PayPal’s Jim Magats: How The Last Six Months Has Changed The Future Of How Consumers Will Shop

When stay-at-home orders first went out in mid-March, consumers didn’t really see it as the start of a major shift in their lives. Most thought the pandemic was going to be a short-term event. But fast forward to mid-September and the lay of the land is very different.

The pandemic has already stretched past the point most U.S. consumers were forecasting early on, but the vast majority PYMNTS has surveyed believe we’ll be well into 2021 before COVID-19 is no longer an active threat. A study conducted jointly by PayPal and PYMNTS revealed that roughly 40 percent are shopping more digitally than physically. And of those consumers who previously reported plans to get back out there as soon as possible, about half have since rethought that proposition and decided they’d rather wait for a vaccine.

Those figures are striking but far from shocking, Jim Magats, senior vice president of omni payments at PayPal, told Karen Webster in a recent Masterclass conversation. After all, he said, the numbers reflect what PayPal has seen over the past six months — and continues to see more and more every day.

Magats said consumers who initially converted their shopping habits to digital out of necessity have, in many cases, learned they prefer that to brick-and-mortar stores. “I just think that people are realizing that a lot of things are easier, safer and more convenient done digitally,” he said. “You can get the same experience and free up a lot of time in your life by doing things this way.”

And while Magats expects the market to continue evolving going forward, more likely than not, there’s no going back to the old ways of doing things. He said that means the task facing PayPal and the FinTech and financial services ecosystem is making it possible for businesses to thrive through this transition.

“It’s incumbent upon us to make sure that that’s the case,” Magats said. “The world’s a better place when businesses  are able to function at scale and they give choice and convenience to customers.”

Meeting Customers’ New Priorities 

Consumers in the pre-pandemic world rarely used the question of available payment methods as a criterion when deciding where to shop, largely because the vast majority of merchants probably took whatever card was in a customer’s wallet.

But in a post-pandemic world, the majority of U.S. consumers PYMNTS surveyed (57 percent) reported that payment options were relevant to where they ultimately chose to transact.

Magats said there are two reasons for such a shift. The first is obvious — offering touchless payments ameliorates consumers’ hygiene concerns in the coronavirus era.

“Six months ago, I was in a conversation about how we get people in the U.S. to even know what a QR code is and how they can use it,” he said. “Now a third of consumers are asking for them. So I think there’s a recognition on the consumer’s part of the desirability of touchless payments of all kinds. It could be a QR code, a contactless card [or] a mobile wallet on the phone. COVID created a great opportunity for acceptance of the idea of things that probably were very foreign to people before.”

The second issue driving consumers to be increasingly dialed into the payments process is how those transactions fit into the larger picture of how merchants are redesigning their brick-and-mortar checkout experiences.

Two decades ago, Magats said, the trend for online merchants was to try to emulate the physical shopping experience. But now, COVID-19 has inverted that and merchants are working overtime to recreate brick-and-mortar shopping in digital commerce’s image.

And that change, he noted, is something they are observing and aiding in across the board in the retail landscape, regardless of size.

“We have such a heterogeneous mix within PayPal and we have 26 plus million merchants. It’s like, you see the Main Street merchant, you see the High Street merchant, you see the big box merchant as we are all going through this.”

Helping SMBs Navigate A Challenging Landscape 

For small- and medium-sized business (SMB) owners, meeting consumers’ rising digital demands isn’t only a matter of doing more, but also of doing things differently.

For example, Magats said, one PayPal merchant who once described himself as being in the business of selling pizza and beer now describes himself as being in the “tech-management business.”

“From a small merchant perspective, that is an extremely challenging situation to figure out,” he said. “We also see that at the larger merchants, but it’s more critical for SMBs. How do they digitize, or create a buy online, pickup in-store experience? How do they make their digital journeys extremely rich?”

Magats said larger retailers have the advantage of both brand recognition popular with consumers in uncertain times and deeper resources to draw upon when it comes to making changes. By contrast, SMBs often need support from PayPal or other players like it to launch digital services at a time when small merchants might be dealing with revenue shortfalls, he said.

After all, Magats noted, the world is a changed place. We can see that showing up in big ways, like the expected great resetting of the holiday shopping season. And we can see it in small things, like legions of consumers who swore they’d never grocery shop online but have since found they can actually deputize someone to find good blueberries for them.

“In many ways, it’s an amazing time that we’ll never forget for sure,” Magats said. “But I actually think that ultimately, this will also prove to be extremely transformational. And so for us, the goal is to make sure we are really tuned in to our customers — and making sure we are doing everything we can to support them.”



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.