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Q&A: Why peer-to-peer payment is PayPal’s lucrative next frontier

PayPal’s peer-to-peer payment platforms such as Venmo and PayPal.Me have seen significant user adoption already, with Venmo’s payment volume clocking in at $1.6 billion in 2015’s second quarter, suggesting that these types of mobile services are an important road forward for the brand.

PayPal’s recent split with online marketplace eBay is enabling the brand to focus more heavily on its suite of mobile payment options, a lucrative frontier considering the proliferation of consumers who have become comfortable with making transactions via smartphone and tablet devices. Mobile shopping will also continue an upward trajectory in the coming months, as more marketers roll out apps and mobile sites equipped to provide seamless checkout experiences with services such as PayPal’s OneTouch.

In an interview with Mobile Commerce Daily, Anuj Nayar, senior director of global initiatives at PayPal, discusses the company’s recent mobile payment ventures, challenges that brands may face in the future and the growing focus on marketing its peer-to-peer platforms.

How important is leveraging mobile platforms for PayPal?
Leveraging mobile commerce is extremely important to PayPal. Mobile commerce is growing far more quickly than ecommerce, as a whole, and eMarketer predicts that these sales will increase by 32 percent in 2015.

This growth will be driven by the increased use of smartphones for holiday shopping as larger screens, mobile-optimized Web pages, newly-developed retail apps and faster mobile checkouts create smoother transactions. We believe this is a huge opportunity for businesses to engage their customers and increase their sales, especially as the holiday season nears.

Mobile commerce is one of the most significant drivers spearheading such a transformative period for business. The most successful retailers will provide a more seamless experience for shoppers, whether they walk into a store, order online, via mobile browser, via an app, or call on the phone. 

What role do you see peer-to-peer payments playing in mobile over the course of the next year?
Globally, the market for peer-to-peer transfers and remittances is worth well over $1 trillion. Although mobile payments are growing, debit account payments represent one of the smallest pieces of the digital payments pie, behind in-store payments and in-app payments (purchases made through an ecommerce app on a phone).

With peer-to-peer payments, people can link their debit card accounts online and digitally transfer money to anyone, essentially replacing cash and checks. It is for this reason, PayPal recently launched a new mobile peer-to-peer payment platform called PayPal.Me.

Through this landmark initiative, over 169 million active PayPal users can create their own user profiles linked to a personalized URL (e.g. This link can then be shared with others as a way to request money via text, over email, on instant messenger, or via social media.

PayPal’s Venmo is also a major player in peer-to-peer payments – in Q2 2015, payment volume on this service was $1.6 billion, up an astounding 247 percent year-over-year. So in short, we believe that peer-to-peer payments will play a significant role in mobile usage over the next year. 

Has mobile payments adoption among consumers been slower or faster than you expected? How about with merchants?
After examining the online and cross-border shopping habits of 17,600 consumers in 22 countries, one thing is clearly evident: mobile shopping is on target for meteoric growth. Consumers are increasingly more comfortable buying on mobile devices.

In fact, they’re buying as many mobile devices as they are desktops, and during last year’s Black Friday, there was a 62 percent increase in mobile ecommerce volume! Mobile payments adoption amongst consumers has been much faster than we expected, and we envisage it will continue to grow in the near future.

As mobile technology becomes more integrated into its users’ lives, the importance of digital wallets increases as a way to pay. This is the perfect time for merchants to go mobile. The new generation of shoppers is increasingly abandoning the inconvenience of bricks-and-mortar stores – and mobile-savvy businesses will reap the rewards.

What is the biggest new opportunity in mobile this year?
PayPal conducted a global survey of mobile shopping trends and found that 47 percent of those who have shopped via mobile prefer to use an app over a browser because of convenience and speed. So while many businesses have been focused on creating mobile-friendly sites, it is important to develop an app strategy.

The same survey also discovered that a younger demographic, 18 to 34-year-olds, accounts for 59 percent of mobile shoppers. For businesses that target millennials, having a well-developed, easy-to-use app will be especially important.

One business that illustrates this perfectly is, which was recently ranked number 11 on Inc. Magazine’s list of the fastest growing private companies in the country. The boutique marketplace features the latest in women’s fashion trends, home decor and children’s clothing.

Noticing an uptick in purchases made via mobile browser, the company decided to simplify its mobile shopping by creating an app for its customers. Today, 35 percent of overall revenue comes from the app, and mobile Web traffic continues to grow as well!

This holiday season, another big opportunity for merchants to drive business growth is contextual commerce, a phrase to describe shopping that can be completed in other digital channels outside of merchants’ online shopping sites. Mobile devices and shoppable social together will enable the full potential of contextual commerce.

If businesses want to effectively reach consumers, then they should be paying attention to shoppable social. Anyone engaged in retail or selling services would benefit from getting a ‘buy’ button distributed to their customers wherever they are.

Do you have a mobile milestone of the past year that you would be willing to share?
Here at PayPal, we’re constantly innovating in order to help merchants expand their sales channels. Last year, we processed four billion payments, and one in four were made on mobile devices. To continue our mission of developing better experiences for our mobile customers, PayPal launched some key initiatives.

We extended our One Touch checkout experience early this year by linking our One Touch Web and mobile experiences. Now, consumers can make single tap purchases from mobile apps even if they don’t have the PayPal app.

Last September, we launched One Touch with PayPal, which has led to as much as 50 percent or greater improvement in mobile conversion rates. We believe that this development will usher in a new generation of more connected consumers and merchants.

This year, on September 1, we also launched PayPal.Me: a new peer-to-peer payment service that allows people to send or collect money with just a link. It is available on mobile (iPhone and Android), desktop, and tablet.

Users can personalize their own PayPal.Me link, which syncs to their PayPal account and can be shared with friends or customers. If someone doesn’t already have a PayPal account, signup is fast and free. There’s also a selectable option for anyone paying for goods or services, so any eligible purchases will be covered by PayPal’s standard buyer protection policies.

Have you had any challenges with any mobile approaches?
Anyone who sells online knows that shopping cart abandonment is a common problem and consumer expectations around mobile shopping are even higher. With the proliferation of mobile commerce, merchants need to think “mobile first” to compete – as in, designing the entire customer experience with mobile top-of-mind.

The need for checkout simplification is even more important on mobile, where entering shipping and billing details on a tiny mobile screen is a significant barrier to purchasing.

Can you discuss any upcoming mobile initiatives that PayPal has for consumers and/or brands?
We are rolling out new innovations such as One Touch, which greatly improves the online and mobile buying experience. Consumers who opt-in to One Touch can securely checkout across all eligible merchants without needing to enter a username, password or payment information, so long as they are using the same device.

Eligible merchants get One Touch automatically – no integration is required to directly address the number one issue they face, which is shopping cart abandonment.

In addition to our branded PayPal wallet, we also have Venmo, a U.S.-only peer-to-peer digital wallet. Venmo will become more important as the world adopts digital wallets, which now only represent one percent of the total $25 trillion retail opportunity.

With a 16-year track record of building trust with millions of customers around the world, we at PayPal will continue to roll out initiatives in the same vein to provide merchants and customers shopping with ease – anytime, anywhere.

Final Take
Alex Samuely, staff writer on Mobile Commerce Daily, New York