PayPal’s Peggy Alford On Buy Now Pay Later, Crypto and the Super App Future

In under 24 months, we’ve witnessed the astonishing success of buy now, pay later (BNPL), the meteoric rise of cryptocurrencies and the effects of a devastating pandemic that sped up payments tech by a factor of years, forcing consumers and businesses to reimagine commerce as they knew it.

As headwinds and tailwinds shift in a stormy time of change, PayPal Executive Vice President of Global Sales Peggy Alford spoke with PYMNTS’ Karen Webster about connecting the dots of a connected economy, streamlining the way its many moving parts and manifold players work together. The interview was done as part of The Commerce Summit, hosted virtually by Commerce Ventures.

Alford said we already have many answers to critical questions about this process that merchants and other businesses aren’t asking now — but will be soon. For instance: “How do I realize all of [these] evolving … capabilities that could add complexity … into a very simplified experience for my business?”

That remit could almost double as PayPal’s current mission statement, she said.

“The platform that we’re trying to provide, sort of this one-stop shop, is really about enabling consumers as well as businesses to be able to adopt easily all of this evolving technology,” she said.

PayPal brought much of this vision into focus during its third-quarter 2021 earnings report, detailing its redesigned app, its super app, deeper moves into BNPL with the acquisition of Paidy, integrating the Venmo peer-to-peer (P2P) app with Amazon and more. In so doing, it gave investors, consumers and competitors a vision of what the connected economy could look like as exemplified by a pioneering platform.

Read more: PayPal’s Super App, BNPL Expansion and More Expected From Q3 Earnings

“The connected economy that lots of folks are talking about, putting that power in the palm of your hand, is about convenience, it’s about security, it’s about flexibility and scalability,” Alford said. “All of those things have to come together because if they don’t, then you end up with more and more innovation that just makes things more difficult to use.”

That thinking informed the design of PayPal’s hotly anticipated super app, launched in Q3, and organized as a series of personalized dashboards connecting many apps into a single view that enables managing it all — from banking to crypto, BNPL to loyalty points — in one app.

Evolving Toward Digital Flexibility

Alford told Webster that for PayPal, “the next evolution — and something that PayPal is focused on — is driving financial inclusion [and] improving financial health with digital technology.”

That’s largely a function of flexibility and rewriting the old rules of where and how we pay.

“Creating this access and the seamless experiences for all the ways that you can buy in all of its forms and doing that to provide access to goods and services around the world is what is going to create kind of the perfect conditions for consumers and merchants globally,” she said.

PayPal is hardly alone on that evolutionary trek, but it shows signs of pulling ahead. A clear example is how the platform is diving into crypto with both feet — to the delight of users.

“We’re building infrastructure in a way that we can evolve because … we don’t know exactly what shape this whole cryptocurrency phenomenon is going to take,” Alford said. “Our goal is to actually be able to support … central bank digital currencies [(CBDCs)] because we really view this as an enabler, not something that’s going to take the place … of central banks around the world.”

Noting that cryptocurrency trading on PayPal “saw exceptional response” and crypto trading volume on the platform “greatly exceeded” expectations — CEO Dan Schulman said the new app drove a 15% lift in consumer crypto transactions — Alford told Webster that PayPal users holding crypto are logging into their accounts at twice the rate of non-holders.

See more: PayPal, Crypto and the Continued Super App Evolution

“That engagement with our wallet is really important,” she said.

However, what Alford said she is most fired up about is “really adding utility to crypto by enabling consumers to use it to purchase, as well as enabling merchants to offer it as a funding source.”

Pointing to the range of businesses small to large using the platform, Alford said “not everybody is going to have the appetite to enable this capability on their own. What we’re really focused on is enabling customers in the U.S. [first] to use their cryptocurrency balance as a funding source, whenever they shop at the millions of merchants across our network.”

The Future of BNPL and the Role of Trust

As big as the crypto and CBDC story is getting, it’s still just beginning. That’s not the case for BNPL, where PayPal has been a major player, starting with its prescient purchase of BillmeLater in 2008.

Unlike pure-play BNPL providers, PayPal’s strategy is to make installments easy for merchants, enabling them in turn to meet consumers clamoring for the option, Alford said.

“Ultimately, we’re a payment processor,” she said. “Payment processors are a scale business, and we have that scale. We don’t make our money by charging a premium. What we do is we focus on ensuring that we’re providing incremental value to the merchants so that they are getting more business from it.”

In turn, she said, businesses are able to attract more volume to the platform.

Pointing to underwriting risk inherent in the BNPL sector during economic upheavals like the current inflation situation, Alford told Webster, “I think some of the smaller … mono-line companies that don’t … have a diversified portfolio of products will see consolidation.”

As with all things financial, consumer and business trust will make or break any proposition.

“It’s so important,” Alford said. “When you think about all of this innovation in the digital payment and commerce space, having that sort of trust to be able to … have your … very personal details … and access to all of these tools in a place that you trust is extremely important. It’s been sort of integral in all of the innovation that we’ve done.”

Read also: PayPal’s New Super-App Positioned to Deliver Next-Level Connected Experience