CEO Alex Chriss wants to exploit purchase data to better serve consumers as well as the merchants that sell to them, in the process becoming more of an e-commerce platform than a payments channel. The plan could also goose PayPal payments volume.
During PayPal’s recent investor day, an analyst asked Alex Chriss, president and CEO, about pricing at checkout on payment platforms. Chriss said that he liked competing “where we leverage our unique assets to play sort of unfair games.”
Elaborating, he said: “We have 400 million consumer accounts. When I sit down with the CEO of a merchant, and I ask them what their biggest challenge is, I have yet to have one of them say it’s basic points on processing. They say, ‘I need more customers. I need to drive more habituated customers to my products.”
Making a particular payment channel a consumer habit could play to merchants’ needs for more sales — if they can align with that usage.
“We say, ‘Great, I have this incredible asset called Venmo. Do you want young affluent demographics? How can we work together to be able to drive those customers to your platform?”
This is a glimpse of a developing change underway at PayPal. Ultimately, a key role in the existence of payment companies is to facilitate additional sales at merchants. From the merchant’s perspective, every bell and whistle must ultimately move more products — which of course increases volume for the payment company.
But simply providing payments is no longer going to be PayPal’s game.
“We need to go from just being a payments processor to thinking about the end-to-end commerce journey — how do we help our merchants find that next customer? — all the way through to helping them in a post-purchase environment and bringing that customer back in an ongoing relationship,” said Chriss.
PayPal management devoted a good deal of the investor meeting to demonstrating how much it is working to change its operations to expand the company’s role. The shift impacts everything from the functions of the PayPal app to the way it organizes and handles consumer data and the expanded role that artificial intelligence will play.
Case in Point: Preparing for a Camping Trip, in Tomorrow’s PayPal Style
In his opening remarks, Chriss noted that merchants’ cost per customer acquisition has more than doubled over the last decade.
“They are throwing money into the ether, especially if they’re a small business,” said Chriss. “They’re just hoping that they show up on the third or fourth page of a search result.”
Instead, Chriss posed this scenario: You’ve been invited to go camping, but you haven’t been in years, so you need to outfit yourself with a backpack, tent and other equipment. The first thing most people do today is hit the web.
The experience often goes badly for the consumer — tons of choices, none of them very well filtered, and once they sort it out, what often happens? Their choice is out of stock.
“As a merchant, this is a terrible, friction-filled experience as well,” said Chriss. “The merchant wants to get me to the right item at the right time. Instead, they’re just guessing as to what I may be interested in.”
Chriss said a payment provider like PayPal, with deep consumer purchase and preference data, is perfectly situated to deliver insights that will help consumers find what they need — and help merchants to complete sales.
Past purchases could inform customer profiles that would detail preferences. A choice of hiking boots could be narrowed down quickly if the profile included the consumer’s size, favourite colours, etc. Payment companies can be the source of much of this data.
With capabilities like those, online shopping for camping could be “an incredibly personalized experience by the time I get to the end,” said Chriss.
In-store, existing technologies could be braided together to send a digital invitation to a suitable e-commerce merchant. The merchant’s message: “We know that you’re on a camping journey. Let me give you a discount because you’re a new customer to us. The cost-per-acquisition that I would have paid to try to get you, I would rather just put in your pocket to have you check out with us right now.” Loyalty programs, long since evolved past membership cards, could automatically be tied in.
Chriss sees PayPal not only being the enabler for commerce, but also integrating advertising and promotion within its app to push people towards participating merchants. Further, he sees consumers being able to pre-set payment preferences before beginning their shopping.
“I’m in a cash crunch right now,” he theorized, thinking like a consumer. “I’ve set up rules so that if I’m making a purchase that’s over $500, I want it to automatically leverage buy now, pay later. And we can make this happen right now in our smart wallet so that by the time I go to checkout and do tap to pay, buy now, pay later is taken care of. The payments are already set up, and I’m not worried about it.”
What’s in PayPal’s Wallet? More Functionality in 2025
The PayPal wallet will be updated in 2025 to permit payment preferences and to incorporate offers, rewards and loyalty programs. Features will be added to produce “smart receipts,” package tracking, and improved management of returns and refunds. In the near future, PayPal will launch a subscription management hub to allow users to add and cancel subscriptions in one central place.
The payment preferences feature follows the recently unveiled Mastercard One Credential. Down the road, AI may become a bigger part of the setting. PayPal conducted a test in which a sample of monthly transactions was run through AI to determine the best credit option for a particular service. The company said that the technology often made better choices, and automated decisions that would have saved the covered consumers $50 million.
Elements of this service will be added to the PayPal wallet in 2025, with a recommendation feature called “Smart Pay”.
In multiple presentations, executives made it clear that PayPal’s sweet spots are young families (aged 30-40) with medium to higher incomes and young urban affluents (18-29). The utility of Venmo beyond traditional P2P transactions — “Pay with Venmo” — is part of making the relationship deeper and more central to the consumers. The key is enabling Venmo users to use funds coming into their accounts to shop in-store and online.
Making PayPal Over into a Commerce Firm is Under Way
Chriss sees GenAI and agentic artificial intelligence as the enablers
“There is going to need to be a commerce platform that stitches all of this together,” said Chris. “A platform that consumers trust with their [payment] instruments and their data that can connect to merchants.”
Take consumer data. Shopping and related information that the company has had on four different platforms, reflecting major divisions such as PayPal and Venmo, is being unified so everything the company knows about a consumer resides in one place, which can be shared with merchants.
Srini Venkatesan, chief technology officer, told analysts that merchants have a limited view of consumers based only on activity with their own brand. Because PayPal deals with millions of merchants and millions of consumers, it can give “a holistic view of the customer well beyond a merchant’s typical view.” He said the goal of the company’s “One Platform” push is “a common chassis that we orchestrate behind the scenes, unseen by the consumer.”
Part of growing and maintaining that wealth of data hinges on keeping consumers in the PayPal fold. “We want consumers to stay in our ecosystem because there is a much larger equation of value from them when they do more with PayPal,” said Diego Scotti, general manager, the consumer group. PayPal rewards on top of rewards, promotions, deals and discounts from merchants will be a key part of the effort.
Morgan Stanley analyst James Faucette asked the management team how both merchants and consumers would feel about such data sharing. He wondered how a major footwear merchant would feel about sharing data that might result in sales for a competitor, for example.
Chriss said PayPal has cultivated “a reputation that stands for privacy” with consumers and said the transaction data belongs to consumers, not merchants.
“As a consumer, I know when I show up, I’m getting a personalized experience with just the things that are right for me and it’s a value for me. And I trust PayPal to be able to share that with merchants,” said Chriss. He believes shoppers’ profiles should be available no matter the sales process, online, in-store or via agentic AI. “We should be able to enable that on a device, online, anywhere you are,” according to Chriss.
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