In a company announcement, President and CEO Dan Schulman painted the layoffs as the next — albeit unfortunate — step in the company’s transformation.
Addressing these changes requires us to make hard decisions that will impact some of our colleagues. Today, I’m writing to share the difficult news that we will be reducing our global workforce by approximately 2,000 full time employees, which is about 7% of our total workforce. These reductions will occur over the coming weeks, with some organizations impacted more than others. We will treat our departing colleagues with the utmost respect and empathy, provide them with generous packages, engage in consultation where required, and support them with their transitions. I want to express my personal appreciation for the meaningful contributions they have made to PayPal.
PayPal has taken the next step in its embrace of cryptocurrency, launching “Checkout with Crypto” to US customers.
The company recently began allowing customers to own, trade and hold cryptocurrency, but now customers can use their currency to make purchases in the US. At the time of purchase, PayPal will convert the cryptocurrency to a fiat currency, with no additional transaction fees.
“As the use of digital payments and digital currencies accelerates, the introduction of Checkout with Crypto continues our focus on driving mainstream adoption of cryptocurrencies, while continuing to offer PayPal customers choice and flexibility in the ways they can pay using the PayPal wallet,” said Dan Schulman, president and CEO, PayPal. “Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies.”
PayPal’s move comes just a day after Visa announced it was accepting USD Coin for settlement transactions.
PayPal has officially expanded its new service enabling users to buy, hold and sell cryptocurrency.
PayPal announced in October that it was moving to support cryptocurrency, although it was only available to a limited number of users at the time. PayPal has now expanded the service to all eligible users, supporting Bitcoin, Ethereum, Bitcoin Cash and Litecoin within the PayPal digital wallet.
When PayPal first made their announcement in October, it sparked a BitCoin rally that helped drive the cryptocurrency above $15,000. Today’s news will likely continue to drive the price up.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said Dan Schulman, president and CEO, PayPal. “Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange. We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
As part of the news, the New York State Department of Financial Services (NYDFS) granted PayPal a first-of-its-kind conditional Bitlicense.
“NYDFS’ approval today follows our June 2020 announcement for a new framework for a conditional Bitlicense to encourage, promote, and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace in a way that is both timely and protective of New York consumers, through partnerships with New York authorized virtual currency firms,” said Linda A. Lacewell, superintendent, NYDFS. “NYDFS will continue to encourage and support financial service providers to operate, grow, remain and expand in New York and work with innovators to enable them to germinate and test their ideas, for a dynamic and forward looking financial services sector, especially as we work to build New York back better in the midst of this pandemic.”
The announcement is good news for PayPal, its customers and cryptocurrency adoption.
Cryptocurrency received a big boost today, with the announcement that PayPal will support buying, selling and holding cryptocurrencies.
PayPal was reported to be looking at the cryptocurrency market in July, with plans to integrate the newer technology. With today’s announcement, the new service will allow customers to buy, sell and hold cryptocurrencies directly in from their PayPal account.
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” said Dan Schulman, president and CEO, PayPal. “Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange. We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
The move appears to be generating significant enthusiasm, as BitCoin’s price jumped to $12,817.17, its highest point since July 2019. PayPal’s support will no doubt help widen adoption of cryptocurrencies.
“It was a strong quarter for us certainly across almost every metric,” says PayPal CEO Dan Schulman. “What’s happened is the world has accelerated from physical to digital across almost every industry. If you look at health care it’s all about telemedicine right now. If you look at education it’s about remote learning. If you look at the retail industry it is now about online almost over offline or physical locations in store. If you look at the restaurant business you really can’t be in business.”
Schulman says that it is imperative for businesses to move toward a digital-first strategy. “If all you’re doing is trying to serve customers at your location given social distancing and the number of people coming out (you won’t survive),” he said. “You have to be about takeout and delivery. Across every industry, we’re seeing this surge towards a digital-first strategy. All of the tools and products and services that we offer are probably more relevant and important across multiple industries than they’ve ever been before.”
PayPal has announced its acquisition of Honey Science Corporation, a price comparison platform that helps shoppers save money.
Honey was founded in 2012 and provides promo codes, discounts and online coupons to customers. Customers can even add items to their list and be notified if the price drops. The company’s addition will help PayPal further simplify the online shopping experience and be a valuable tool for PayPal’s network of merchants.
“The acquisition supports PayPal and Honey’s shared mission to simplify and personalize shopping experiences for consumers while driving conversion and increasing consumer engagement and sales for merchants. The combination will help accelerate growth across both companies. Honey will accelerate its growth by driving adoption among PayPal and Venmo’s more than 275 million active consumer accounts and sourcing exclusive offers from PayPal’s extensive network of 24 million merchant accounts. Honey will enable PayPal to reach consumers at the beginning of their shopping journeys and will enhance PayPal’s ability to help merchants acquire and convert consumers by delivering offers that are personalized, timely, and optimized across channels.”
Amid increasing competition from Apple Pay, Google Pay and other digital wallet systems, PayPal also hopes the acquisition will help it drive user engagement.
“Honey is amongst the most transformative acquisitions in PayPal’s history. It provides a broad portfolio of services to simplify the consumer shopping experience, while at the same time making it more affordable and rewarding,” said Dan Schulman, president and CEO of PayPal. “The combination of Honey’s complementary consumer products with our platform will significantly enhance our ability to drive engagement and play a more meaningful role in the daily lives of our consumers. As a partner of choice for our merchants, this is another way that we can help them build and strengthen their customer relationships, provide personalized offers, and drive incremental sales. The combination of Honey and PayPal adds another significant and meaningful dimension to our two-sided platform.”
The real secret to Venmo is that it’s not just a payment transaction, it’s really a social experience, says PayPal CEO Dan Schulman. “It really is tying into this desire in the millennial generation to tie into your social network,” noted Schulman. “It’s really a social experience. You do a payment, you tag it, you put an emoji next to it, you share it with your friends, and they see what you’re doing. It’s exploded.”
Dan Schulman, CEO of PayPal, discussed PayPal’s fast-growing social payment platform Venmo in an interview on CNBC:
The Real Secret to Venmo is the Social Experience
Venmo grew at 80 percent year-over-year in terms of its volume process. This year we will process over a $100 billion on the Venmo platform. The real secret to Venmo is that it’s not just a payment transaction. It really is tying into this desire in the millennial generation to tie into your social network. It’s really a social experience. You do a payment, you tag it, you put an emoji next to it, you share it with your friends, and they see what you’re doing. It’s exploded.
We’re adding more and more services to that like enabling you to use Venmo to buy things at merchants, to take money off instantaneously, and to have a debit card associated with your Vemma account. That’s allowing us to also monetize Venmo. We’re really seeing a tremendous turn in our ability to take that business model and turned it into a very profitable one for us over the medium to long term.
We exited last year at an approximately $200 million run rate for Venmo. That’s practically up from nothing twelve months ago. It’s obviously hitting an inflection point in terms of its revenues. But in terms of profitability people shouldn’t expect it to be profitable in the next one to two quarters. My view on Venmo is it’s an incredibly precious asset for us. We ought to keep investing in it, adding more services to it, continue to monetize it, and see the revenue start to scale quite nicely. Eventually, that will lead to profitability, but I wouldn’t predict exactly what quarter we will turn profitable on that.
Peer to Peer Payments Are Exploding
I don’t think it’s unfair at all that the banks partnered to create Zelle. That’s the way of the world that companies are coming together and sharing platforms. We share our platform with other banks and financial institutions as well. P2P or peer-to-peer payments is exploding in the market. It’s a multi-hundred billion dollar marketplace. This will definitely not be a winner-take-all.
The difference between a Venmo and a Zelle is pretty stark. On average a Zelle transaction is $250. The average Venmo transaction is about $50. The average Zelle transaction happens about once a month. Venmo happens four or five times a week. It’s a very different market and I think both will both will grow. We’re seeing all-time record net new actives coming into Venmo. The amount we’re processing is accelerating. I think the two will live side by side and it won’t be a winner-take-all.
This is a $100 Trillion Market
Asia is one of our fastest growing regions in the world. It has been for quite some time. That’s the thing about digital payments. It’s a great industry. It could be you know a $100 trillion market. That’s the total addressable market we’re playing in. We may have one to two percent share of that market today. Every region of the world is one that we can expand in, but every region of the world today, almost equally, is growing at a double-digit pace for us. I’m quite pleased with our progress in Asia but I think we can do so much more there still.
India is one very large opportunity and we’re gaining traction there. We launched domestically in India about a year ago and I’m really pleased with the traction we’re getting. You look at Japan, Indonesia, China, and they’re all great opportunities for us including other markets there.