PayPal’s One-Day Coupons Drive Traffic To Local SMBs

When we think about holidays on Main Street, there is a certain mental image we all flash to, nurtured by decades of singing Christmas carols. We all know the picture — city sidewalks, busy sidewalks, people dressed in holiday style. Children laughing, people passing, meeting smile after smile — otherwise known as the standard “Silver Bells” special.

But like so many other things this year, that image might be on hold for 2020. The sidewalks and shops will likely be less crowded, and if consumers are wearing smiles, they’ll likely be obscured by masks as it seems COVID-19 pandemic cases will be ringing in the year on the rise.

The U.S. Centers for Disease Control and Prevention is strongly recommending that consumers relocate their holiday shopping online, and forecasts call for physical retail to be way down this season. At first glance, that seems to portend quite poorly for Main Street merchants who’d hoped to recoup some revenue from a year that left many battered and wondering nearly from the start if they’d be able to survive at all.

But while the surveys PYMNTS has done with consumers and Main Street merchants over the past eight months demonstrate that the worry is genuine and can be documented with data, so is Main Street’s scrappiness. Small- and medium-sized businesses (SMBs) aren’t going down without a fight.

Within the context of 2020, that has meant a rapid shift to digital and multi-channel sales methods. And that digital pivot has been aided by larger players like PayPal. They’ve developed a genuine commitment to helping small businesses make the digital dives needed to capture the post-pandemic customer during the holiday season.

Specialized Coupons And Other SMB Digital Boosters

Keen-eyed PayPal shoppers have likely noticed the start of some rather unusual coupon offers rolling into their inboxes of late. These are usable only for a single day, with a single merchant and redeemable only via payment with the PayPal wallet (although automatically redeemed when the customer pays with PayPal). The short time span of usability is meant to push consumers to act quickly. And it allows small shops looking to create digital spend during the holiday season to send targeted offers to likely customers instead of using the rather blunt tools of across-the-board discounting to draw in sales.

The rollout of these one-day coupons follows the rollout of Pay in Four, PayPal’s new installment-payments product. The company includes Pay in Four for merchants as part of the standard PayPal integration.

The new program doesn’t replace any existing PayPal credit offerings but exists alongside to give merchants the option of offering customers a way to spread payments across four monthly installments on purchases between $300 and $600.

Doug Bland, PayPal’s senior vice president of global credit, told Karen Webster shortly after the program went live in the United States that Pay in Four is part of a larger company effort. He said PayPal wants to help SMBs bridge the digital divide quickly and with the kinds of services consumers are demanding.

“What we continuously hear from businesses of all sizes is that they are looking for trusted ways to help drive sales [and] attract customers without taking on additional costs,” Bland said. “At the same time, what we hear from our consumers is they are looking for flexible and responsible ways to pay when they shop. This has all accelerated during the pandemic, and this economic uncertainty has created additional stress for the retailers and for consumers.”

Similar logic has been behind PayPal’s push deeper into QR codes. Jeremy Jonker, senior vice president and head of consumer in-store and digital commerce at PayPal, told Karen Webster over the summer that such moves aim to meet skyrocketing demand for QR code-based payment options when consumers are transacting in physical stores.

“[PayPal] accelerated the efforts around QR codes … because our consumers and merchants are demanding and requesting contactless payments, [but] a lot of payment methods today aren’t necessarily contactless,” Jonker said. “You still have to do a signature … you still have to put in PIN codes. What we developed … is purely and truly contactless.”

Those QR codes can function as lifelines for SMBs that have struggled to make an easily integrated and almost immediately usable on-ramp for contactless payment options.

And while PayPal has been busy, it’s not alone. Visa’s stated goal since its July launch of online-resource hubs for SMBs has been to provide the resources and tools necessary for 50 million small businesses worldwide to get back on track.

“One of the things we’ve been saying [is] that recovery doesn’t happen until we solve small business,” Suzan Kereere, Visa’s head of merchant sales and acquiring, noted in a July interview with Karen Webster.

“There is no recovery until [SMBs] are back on their feet,” she said. “The economy can’t thrive in a world where small businesses are failing — they generate an outsized share of employment and GDP. And we need to know what it means to them to thrive in our commercial ecosystem because the new ecosystems won’t work until they do.”

Fortunately, Visa’s Back to Business Study: Holiday Edition found that consumers are planning to shop this holiday, with 88 percent of them expecting to buy gifts. But the more complicated news, Visa’s Global Head of Business Solutions Kevin Phalen noted in an interview with PYMNTS, is that much of that traffic will be coming in from consumers ordering digitally — either for delivery or curbside pickup.

He said the SMBs that will capture the customer this holiday will be the ones that have become digitally ready. Phalen said that’s what’s behind Visa’s goal of bringing 50 million SMBs access to the Visa network and ecosystem over the next three years, including the “full set of assets, including payments, that they need to develop and grow their business.”

And, by the numbers PYMNTS has seen, small merchants have been serious about adding as many of those assets as possible as they’ve attempted to shift their business operations along with their customers’ emerging preferences.

The Great Shift

When PYMNTS and Visa recently surveyed consumers for our annual How We Will Pay Survey in 2020, we found the consumer base has shifted.

For instance, some 33 percent reported a preference for contactless-payment methods. Their entire shopping schedule has also shifted. Where once roughly three-quarters reserved weekends as their official shopping time, consumers’ shift to digital has increasingly converted shopping time to anytime.

And 57 percent of those consumers reported that the availability of digital-payment options affect their choice of which merchants to shop with, according to PYMNTs/PayPal’s most recent data. That same survey noted that consumers are increasingly looking for features like contactless QR-based payments and installment options.

And merchants, according to PYMNTS data, have followed along with those shifts. Some 79 percent of consumers reported that the merchants they shop with have added or improved their digital-first and touchless experiences over the pandemic’s course. Curbside pickup (55 percent) and contactless payments (51 percent) are the two features that consumers say more merchants have added as options.

All in, the SMBs entering 2020’s holiday-shopping season are quite different than the ones that dived head-first into the digital world in March. They’ve been building out, branching out and making the digital shift as fast as consumers can change their preferences.

Will that be enough to make the holiday season merry and bright on Main Street in 2020?  It’s hard to say yet. But if it can be done, we imagine SMBs will do what they’ve done all year — find a way to get it done despite the tough odds stacked against them.

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