Schulman: PayPal’s Open Platform Is Key to Success in Digitization of Money
Explosive developments in mobile commerce and payments will drive a level of disruption in the next three to five years unlike anything the financial services industry has seen before, Dan Schulman, incoming CEO of PayPal, forecast this week. In his first appearance before investors since joining the company, Schulman told analysts at a Morgan Stanley conference in San Francisco he believes PayPal is ideally positioned to thrive in the tumult. He cited as positives the growth in online and mobile commerce as well as the company’s agnostic approach. Schulman joined PayPal in October after four years leading American Express’ enterprise growth unit.
PayPal already has a big head start in the shift to digital payments with its well-recognized brand and global footprint closely tied to online and mobile payments, Schulman said. With more than 160 million customers worldwide, one in three U.S. adults is an active PayPal user. The company also is integrated with more than 7 million merchants and handled 4 billion transactions last year, with 25 percent of those on mobile devices. As the world shifts away from cash to using mobile for more daily transactions, PayPal plans to capture a larger share of all commerce. Forty percent of money passing through consumers’ wallets today is in the form of checks or cash, Schulman said. “Physical money, whether that be check, cash, credit card, is all digitizing in front of us,” he said, and PayPal is “perfectly poised” to lead in the paradigm shift.
PayPal will use acquired technological firepower from Braintree and Paydiant to expand its reach to more markets, consumers and merchants, including in-store payments, Schulman said. But e-commerce remains PayPal’s “sweet spot.” E-commerce currently represents only about 10 percent of the estimated $25 trillion in total commerce, and it’s set to grow about 20 percent in the next several years, Schulman believes. In this fast-growing market, PayPal processes $1 out of every $6 spent worldwide online. Schulman also welcomed the rise of Apple Pay and other emerging mobile payments services, viewed by some as potential threats to PayPal. “We actually don’t care if it’s an NFC reader out there, a QR code reader, HCE or beacon,” he said, adding that PayPal already is integrated with many of the merchants that accept Apple Pay.
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