PayPal’s plan to morph itself into a “super app” have been given a go for launch. According to PayPal CEO Dan Schulman, speaking to investors during this week’s second-quarter earnings, the initial version of PayPal’s new consumer digital wallet app is now “code complete” and the company is preparing to slowly ramp up. Over the next several months, PayPal expects to be fully ramped in the U.S., with new payment services, financial services, commerce and shopping tools arriving every quarter.
The company has spoken for some time about its “super app” ambitions — a shift in product direction that would make PayPal a U.S.-based version of something like China’s WeChat or Alipay or India’s Paytm. Similar to these apps, PayPal aims to offer a host of consumer services under one roof, beyond just mobile payments.
In previous quarters, PayPal said these new features may include things like enhanced direct deposit, check cashing, budgeting tools, bill pay, crypto support, subscription management, and buy now/pay later functionality. It also said it would integrate commerce, thanks to the mobile shopping tools acquired by way of its $4 billion Honey acquisition from 2019.
So far, PayPal has continued to run Honey as a standalone application, website and browser extension, but the super app could incorporate more of its deal-finding functions, price tracking features, and other benefits.
On Wednesday’s earnings call, Schulman revealed the super app would include a few other features as well, including high-yield savings, early access to direct deposit funds, and messaging functionality outside of peer-to-peer payments — meaning you could chat with family and friends directly through the app’s user interface.
PayPal hadn’t yet announced its plans to include a messaging component until now, but the feature makes sense in terms of how people often combine chat and peer-to-peer payments today. For example, someone may want to make a personal request for the funds instead of just sending an automated request through an app. Or, after receiving payment, a user may want to respond with a “thank you,” or other acknowledgement. Currently, these conversations take place outside of the payment app itself on platforms like iMessage. Now, that could change.
“We think that’s going to drive a lot of engagement on the platform,” said Schulman. “You don’t have to leave the platform to message back and forth.”
With the increased user engagement, the company expects to see a related bump in average revenue per active account.
Schulman also hinted at “additional crypto capabilities,” which were not detailed. However, PayPal earlier this month increased the crypto purchase limit from $20,000 to $100,000 for eligible PayPal customers in the U.S., with no annual purchase limit. The company also this year made it possible for consumers to check out at millions of online businesses using their cryptocurrencies, by first converting the crypto to cash then settling with the merchant in U.S. dollars.
Though the app’s code is now complete, Schulman said the plan is to continue to iterate on the product experience, noting that the initial version will not be “the be-all and end-all.” Instead, the app will see steady releases and new functionality on a quarterly basis.
However, he did say that early on, the new features would include the high-yield savings, improved bill pay with a better user experience and more billers and aggregators, as well as early access to direct deposit, budgeting tools, and the new two-way messaging feature.
To integrate all the new features into the super app, PayPal will undergo a major overhaul of its user interface.
“Obviously, the [user experience] is being redesigned,” Schulman noted. “We’ve got rewards and shopping. We’ve got a whole giving hub around crowdsourcing, giving to charities. And then, obviously, Buy Now, Pay Later will be fully integrated into it…The last time I counted, it was like 25 new capabilities that we’re going to put into the super app,” he said.
The digital wallet app will also be personalized to the end user, so no two apps are the same. This will be done using both A.I. and machine learning capabilities to “enhance each customer’s experiences and opportunities,” said Schulman.
PayPal delivered an earnings beat in the second quarter with $6.24 billion in revenue, versus the $6.27 billion Wall St. expected, and earnings per share of $1.15 versus the $1.12 expected. Total payment volume from merchant customers also jumped 40% to $311 billion, while analysts had projected $295.2 billion. But the company’s stock slipped due to a lowered outlook for Q3, impacted by eBay’s transition to its own managed payments service.
In addition, PayPal gained 11.4 million net new active accounts in the quarter, to reach 403 million total active accounts.