PayPal’s Digital Wallet Will Change "Money"

“PayPal is changing," says  Anuj Nayar, PayPal director of communications. "We’re known as an online payments brand but this is all part of PayPal becoming an actual wallet.” And that's arguably understating PayPal's present ambitions, or potential impact. For the moment, PayPal wants to change the payment experience in substantial ways.


Sam Shrauger, Vice President of Global Product and Experience for PayPal, says that the new PayPal will feature flexibility with how you want to pay for an item in a store.


With the new digital wallet, you can buy something in a store, take it home and decide later how you want to pay for it. PayPal will offer a five to seven-day grace period for consumers to change their minds. 


Users might also be able to combine gift card or prepaid card payments with other forms of payment, not all so traditional. PayPal has talked about allowing payment using airline affinity program miles, for example.


PayPal wants to change the user experience of “money,” as customers use “stored value” to buy things in stores. In part, that will entail providing an incrementally-new form of payment, not to be confused with “method of payment.”

You might say “paying by waving a mobile at a terminal” is a new method of payment. But PayPal is looking at something different, namely a different form of payment that could mix sources in new ways and also create a new type of banking relationship.


Highly-successful mobile money systems will demonstrate clear value, for both consumers and retailers, it is clear. What already seems quite clear is that simply adding a new form of payment, namely the ability to link a credit or debit card account to a mobile phone, and then swipe the phone to make a retail payment, has limited incremental value, in most cases.


PayPal’s approach to mobile payments and mobile wallet therefore hinges on changing the payment experience in other ways. Among the more interesting approaches PayPal is taking is the separation of transaction from payment method.


For example, if a consumer wanted to use airline miles, in part, a coupon or gift card, in part, PayPal would create ways for consumers to do that. The retailer would still receive the “cash,” but PayPal might handle all the account management details needed to convert miles into cash, for example.


Many consumers have virtual “funds” used to buy groceries and pay bills. PayPal could enable users to “debit” specific accounts when shopping.

In other cases, when making a major purchase, a consumer might prefer to pay in installments, but not use a credit instrument. PayPal will enable installment payments. The merchant is paid upfront, but PayPal will essentially become the banker, allowing the user to pay over time.

There are other features related to shopping that will become part of the PayPal wallet, such as integrating shopping lists, searching for items and comparing prices. Take it a step further and then imagine an automated way to connect a list with location with availability, prices and then available time on your schedule.

PayPal is not about replacing a card swipe with a phone tap at point of sale. We are reimagining money to free it in its digital form, says Sam Shrauger, PayPal VP.