Strategy Discussion: CTO Sri Shivananda Talks About Paypal’s Push To Help Both The Enterprise & The Unbanked

PayPal has grown from a financial startup to a financial stalwart. The company has become almost a default method for person to person and online transactions, and to a large degree has been usurping the role banks have played in the lives of consumers. Should banks be afraid? Paypal is now moving more and more into enterprise B2C commerce. On the other hand, PayPal seems to now be making up for a relatively slow start into the Latin American market, partnering with the likes of MercadoLibre and Facebook.

Finance Colombia’s executive editor Loren Moss was able to speak with PayPal’s CTO Sri Shivananda about the company’s strategy in The Americas, but also drilling down into the company’s plans to bring the unbanked into the world of e-commerce.

 Finance Colombia: Are banks becoming obsolete? I cannot think of much that I can do with a bank that I cannot do through PayPal.

 Sri Shivananda: Banking as a paradigm will stay but the delivery mechanisms are evolving. People need to move and manage their money and we will see delightful new experiences of value that enable access to these services for a broader group of people around the world. Digital payments and companies such as PayPal have certainly made it easier to move and manage money. Just think about how often you wrote checks or ran to the ATM five or ten years ago, and how today you do that less frequently. To us the next evolution – and something that PayPal is focused on – is driving financial inclusion and improving financial health with digital technology. Digital payments are making financial services more universally affordable and accessible and we are happy to contribute to this progress with our solutions and by partnering with banks all over the world. The digitization of money, rapid expansion of internet access, adoption of mobile phones and access to goods and services around the world has created the perfect conditions to better serve consumers and merchants globally.

Finance Colombia: Around the globe, there are still large segments of the population that are unbanked. What role can PayPal play in addressing that part of the digital divide?

Sri Shivananda: Solving for financial inclusion starts with identity. Access for the underbanked can be enabled by digital identity, which creates a stable and credible foundation with a trail of trust. This trusted digital identity can enable a person to be eligible for services provided by financial institutions.

“People need to move and manage their money and we will see delightful new experiences of value that enable access to these services for a broader group of people around the world.”– Paypal CTO Sri Shivananda

In Latin America alone, there are more than 2 billion unbanked people who do not have access to financial services, making digital inclusion one the major current challenges in emerging economies. Most Latin American countries have a banking rate under 60%, according to the Federation of Latin American Banks, while in developed countries, such as the United States, Germany or Spain, more than 85% of the population may access financial services.

We think digital payments are making financial services more universally affordable and accessible. This can drive financial inclusion and financial health for billions of people worldwide. It has the potential to give people greater control of their economic destiny and new ways to create opportunities for themselves, their families, and communities. Numerous studies make it clear that when people are financially included, they are more likely to start new businesses and invest in education. And research indicates that financial inclusion has a positive impact on economic growth and can help reduce income inequality.

To me, the next evolution – and something that PayPal is laser focused on – is improving financial health with digital technology.

 Finance Colombia: PayPal dominates individual and small business use cases. Does PayPal have an enterprise strategy beyond enabling PayPal as a payment option for retail vendors? What is PayPal’s roadmap with regards to enterprise & B2B use cases?

 Sri Shivananda: Supporting enterprise merchants is a top priority for PayPal. We work with some of the world’s most recognizable brands including Ipiranga, Spotify, MercadoLibre, Facebook and more.

 While many know PayPal to offer payment processing, our suite of products extends far beyond processing and includes a unified set of world-class commerce tools that work across borders, channels and platforms. This includes tools like QR codes for in-person payments that offer customers a touch-free way to way to pay. CVS Pharmacy just installed PayPal and Venmo QR codes in 8,200 of its stores to offer a safe checkout option without the need to touch a keypad or sign a receipt. And, we are helping merchants to protect what they’ve built by offering fraud tools with real-time fraud detection, dispute management and AI-based risk intelligence services.  In addition to our suite of solutions, PayPal is focused on strengthening and expanding our 50 plus industry partnerships with banks, issuers and networks, as well as offering enterprise merchants a variety of choice at checkout to pay how, where and when they want.

 In LatAm, PayPal continues to grow our partnerships with marketplaces like MercadoLibre, who recently added PayPal as a checkout option in Brazil and Mexico. In addition, we’ve expanded our portfolio in Brazil through a partnership with Abastece Aí, a company recently created by Grupo Ultra, a holding company of Ipiranga, one of the largest gas station chains in the country. To give an idea of scope, in 2019, Abastece Aí handled around $4 billion in fuel transactions, and now all of these payments will run through PayPal.

 Finance Colombia: This year has obviously been dominated by the COVID Pandemic. How has it affected usage patterns? Obviously, more people are shopping online. Have there been any unexpected changes or evolutions observed?

Sri Shivananda: Many companies and industries have been severely affected, but there has also been great opportunities for some to prosper. Between the proliferation of Covid-19 and the call to stay at home in the face of quarantine measures, electronic commerce has been a lifeline for small, medium, and large companies in Latin America and around the globe. Let me give you some examples of how e commerce has grown in the region as a side effect of the pandemic:

• According to Statista, in the first 15 days of March 2020, overall e-commerce sales in Brazil increased by 40% compared to the first 15 days of March 2019. The number of new online shoppers also increased during the month. Meanwhile, online sales of health-related products increased more than 120%.
  • A recent Nielsen report states that in the first week that the coronavirus reached Chile, online sales increased by 41%.
  • In Colombia, there has also been an increase in online commerce. According to the Colombian Chamber of Electronic Commerce, e-commerce has grown between 50% and 80% during the quarantine, with the categories of sports (85.6%), retail (52.9%) and health (38.2%) having grown the most.
  • In Mexico, delivery services and online platforms, as well as large wholesalers and hygiene production companies have shown high growth indicators.