During times of economic uncertainty, adhering to the old “cash is king” mentality might seem like the safest choice for a small business owner. However, as we’ve observed throughout the course of this pandemic, the businesses that have fared best were usually the ones that were flexible enough to offer a wide variety of payment options. In today’s episode, Jon Aidukonis and Gene Marks, along with Nitin Prabhu, Vice President of Merchant Platforms, Developer Ecosystem and In-person Commerce at PayPal, discuss how small businesses can benefit from partnering with a mobile payment company.

*Consumer demand for global pay-later products on Black Friday exceeded our expectations with volumes nearly 4x the TPV generated in 2020.

Executive Summary

1:03—Today’s Topic: How Can Mobile Payment Platforms Support the Growth of My Small Business?

1:25—Over the years, PayPal and other mobile payment companies have enabled small business owners to increase their revenue by diversifying the types of payments they can accept.

3:34—PayPal primarily serves as a point of sales solution for businesses that want to offer both in-store and online payment; now, thanks to technological advances, PayPal has expanded their services to include inventory onboarding, tax management and payment collecting.

4:12—QR codes also became popular among business owners during the pandemic because they enabled customers to make secure transactions instantly and provided them with notifications about their purchases.

7:31—Before reaching out to PayPal or another vendor, you need to consider the reputation of that company and whether the brand will inspire your customers to trust them.

8:17—You need to have a clear understanding of the type of security measures or tools that a company utilizes to protect you and your customers.

8:53—Look for a payment platform that has a wide breadth so that you can grow an international client base.

9:11—Lastly, before you partner with a company, find out whether they can help you with your post purchase experiences, such as shipping, taxes, and invoicing.

10:14—PayPal offers a number of services that cater specifically to B2B businesses. These services include keeping track of international taxes and regulations; managing different currency exchange rates; and assisting with invoicing.

12:17—PayPal supports a wide array of payment methods, such as credit cards, virtual wallets, and crypto currency.

13:55—PayPal developed a product that sells the customers’ crypto payments at the merchant’s set price, so that the merchant will always receive full payment, regardless of marketplace fluctuation.

16:06—PayPal is equipped to integrate easily with almost any ERP (Enterprise Resource Planning) platform.

18:01—The main advantages of using PayPal are that they cater to the customers’ payment preferences; they offer top notch safety and security; and they have a trustworthy reputation.

21:16—Business owners should keep in mind that all the additional fees help ensure the high quality and security of PayPal’s products; if you’re interested in saving on PayPal fees, you might want to consider getting their business debit card which offers one percent cash back.

24:52—The additional fees also help cover the convenience of PayPal’s products and services.

27:16—Based on trends, business owners should prepare to see an increase in mobile payments, QR code usage, and in-store pickups of online purchases.

28:57—In the future, PayPal may also find a way to apply your loyalty cards and coupons towards your purchases.

30:38—While “buy now, pay later” transactions are becoming increasingly popular, PayPal is trying to create policies to ensure that their customers will be able to complete their payments.



The views and opinions expressed on this podcast are for informational purposes only, and solely those of the podcast participants, contributors, and guests, and do not constitute an endorsement by or necessarily represent the views of The Hartford or its affiliates.

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Jon: Hello, everyone, and thank you for tuning in for another episode of Small Biz Ahead, the small business podcast presented by The Hartford. This is Jon Aidukonis and Happy New Year. I am joined by my co-host Gene Marks. Gene, how’s it going?

Gene: Going good, Jon, and happy new year to you.

Jon: Happy new year. And we have a very special guest today, Nitin Prabhu. Nitin serves as the vice president of merchant platforms, developer ecosystem, and in-store commerce at PayPal where he leads a team focused on building merchant/product experience and capabilities. Nitin, how are you?

Nitin: I’m good. Thank you. I also wanted to wish all of you a happy new year, and I know we are living in some uncertain times with Omicron spreading, so I wish you the best of health.

Jon: Oh, thank you so much. Back at ya. All right. Well, we’re excited to have you today, Nitin. I guess we’ll start a little bit. Maybe you could talk to us a little bit about you and your role at PayPal and kind of how PayPal serves small business owners.

Nitin: Thank you. First of all, thank you for having us. We are very excited to be here. I think small businesses are a very important part of our community and a lot of our friends, neighbors, and family members work there and I’m a big supporter of them. We at PayPal have a lot of initiatives that support small businesses. I actually got to learn a lot about them when I worked with a small restaurant and this was a lady who had a Persian cuisine restaurant, and she was a first generation immigrant, and she was trying to support a family as well as earn a livelihood.

And we had a program partnering with the city and working with her, and that gave us a lot of insights into the problems that she faced and, what you call, the challenges that her businesses saw every day. And that actually was a great learning experiences as we designed different products like our PayPal here and Zettle terminals as well as working capital and others. So mobile payments, we believe is an important part for small businesses. We at PayPal are really excited to work with small businesses and support the community.

Jon: Awesome. Yeah. It’s, I think it’s a new world, right? So I think about just five or 10 years ago, where you had cash in your wallet, you’d go and buy something and you were done. It feels like, I guess the saying cash is king maybe is not true. I actually went to a vending counter the other day and they did not accept cash. I’ve been in some restaurants that don’t.

So I think this kind of new way of transacting is probably top of mind for a lot of small business owners and the fact that you need to now diversify the way you can take payment to a degree that I think is pretty new and rather extreme from where it was just in the recent past is really interesting. So I don’t know if many people, our listeners probably do, but PayPal, I think about it as a consumer, right. So I actually reloaded my coffee shop card today with my PayPal on my phone. But you actually have in-store or commerce experiences for businesses, too. And that’s kind of what you sit and oversee, correct?

Nitin: Yes.

Jon: Awesome. So how does that kind of work in terms of a small business owner? So they have a cash register, they have their POS system, and then PayPal becomes just a method of transacting? Maybe talk to us a little bit about if I’m a business owner how I would think about PayPal as a service provider in that space.

Nitin: Absolutely. I think that’s a great question. And we have several different products, right, that serve different businesses based on their needs. Like we have a point of sale solution. Now, a lot of these small merchants, they need small point of sale solutions that are flexible, portable, and can work with their mobile app. So we, a few years ago, acquired this company called Zettle that we are bringing to U.S. and that basically provides you an end-to-end solution, right, from how you onboard your inventory, manage your taxes, collect payments. That’s something we believe helps businesses manage their day to day operations in a holistic manner.

We also have other products. As the pandemic onset, we realize that there was a lot of small merchants who are just accepting cash and we hence launched QR codes. Now QR codes is something that has been very prevalent in markets like China and India, but in the U.S. they were not.

I’ll give you this example of merchant that used to sell Christmas trees, and you could only go there and pay in cash. With the onset of pandemic they were worried about touching cash. So they used to tell people, “Hey, put the money in the envelope and keep it on the site and we’re going to look … we’re going to touch the envelope only in five days.” But what they did was they went and adopted PayPal and Venmo QR codes, and people used to pay digitally and they used to instantly get notification on their app. I think the first week they adopted, they did $28,000 worth of business. And 90% of the payments came through QR so that it was something that we believe is another interesting solution.

I see a lot of different use cases with that. In downtown there’s actually a parking lot, where close to the airport, where you park a car, and then the way you pay is you put money in an envelope, you write your card number and parking spot and time, and put in a box. Especially with the onset of pandemic, that is not something that people were comfortable doing. And that’s … again, I saw them putting a QR code and in your mobile app, along with the QR code payment, you could send the parking spot and the number of your car. So we completely transformed a physical experience into a digital experience.

The other thing that I think PayPal helped helps a lot of small businesses is with working capital. Now, especially with onset of the pandemic, I think a lot of businesses were struggling with the financials. So PayPal did partner with the government in the distribution of PPE loans. And what I could … I can be very proud to say that is we probably distributed billions of dollars of loans in partnership with the government and our approval rates were one of the best in the industry, as well as the dollar amounts. The dollar amounts that we were approving were really small, which also made sure that it was actually helping businesses that were the most vulnerable and that it needed most. In addition to that, I think our world is becoming increasingly mobile and we have a host of tools that helps small businesses take their businesses online and attract a much larger audience.

Jon: Gotcha. And I think that’s important because I think people are, you know, kind of looking for, to your point, how they recreate these physical experiences, including shopping online. So that’s a wide range of products and a wide range of ways you’ve kind of shown up for small businesses over the past couple years. But I think when it comes to kind of more like day to day, you know, maybe we can talk a little bit more about your POS system and kind of the merchant solution there. So, you know, if I’m a small business owner and I’m thinking about setting up my counter for commerce, but I also have an online store, maybe I want to do mobile payments because that’s kind of a new thing. What are the things I should be thinking about before I reach out to a PayPal or another vendor, right?

What kind of things should I maybe do in terms of like homework? Are there certain kind of questions I should ask? What are the kind of considerations I might have as I’m looking to transition to a more, you know, modern or tech based payment solution provider?

Nitin: I think a couple of things, right? First of all, I think small businesses, they’re clearly busy. They have to run a business. And if they think about, “Hey, how do I manage payment, charge, cashflow and all of that stuff?” That actually makes the life tougher. So we, and a lot of other companies, envision to make their lives easier. Here are a few questions I believe we should ask.

First of all, you should ask, “Hey, the brand that I’m working with, how reputed or trusted it is?” Because a lot of times when consumers come to your site and they see a brand like PayPal or Venmo that they implicitly trust, we have over 400 million consumers and 30 million merchants, they, what you call, pay more. There was a study from Forester that said that 37% of the consumers will not shop at a merchant if their preferred payment method is not there. So I think the brand and the trust that it brings along is important.

The second thing is, besides cost, which is important, what are the other tools that they’re bringing to make your businesses more secure. With the advent of online I think charge, and what you call, the online fraud rates have really gone up. There’s a study that said that said that 65% of these businesses are not able to manage online fraud. And that’s where you need to look at companies who can help you there. At PayPal, we have thousands of employees across the globe who are working day in and day out to look at how we manage fraud for our merchants and customers. And we use sophisticated AI and machine learning tools.

And the third thing I think you should look at is which company gives you the most breadth, because it’s important that you can get the most number of consumers and from different locations and even international. For example, if you’re creating shoes or t-shirts, you don’t want to only serve as the local market, but your international market.

And the last thing maybe is how do you help with your post purchase experiences like shipping, taxes, invoicing. So I think these are the three or four factors if I was a small business, I would be looking at for deciding a partner.

Jon: Awesome. Yeah, I think those are good considerations and I think it kind of sets the landscape of how payments are probably more complex than they used to be, how shopping has evolved a lot over the past decade or so. And really, kind of, the future is going to be not only meeting customers where they are in terms of like what they want and the services that they want, but also how they want to redeem and pay for those services. So, I think, Gene, you are a small business owner and you take payment from people every day. So I’m sure you have some questions in your noggin.

Gene: I do. I do. And thanks. This is great stuff. You know, we’ve been focusing a little bit on sort of the retail merchants, B to C, you know, channel here. Tell me about B to B. How do you see your B to B customers, your business to business customers, using PayPal?

Nitin: I think that’s a great question, right? I think we get to launch that segment of consumers and merchants and they’re in B to B and B to C space, as well. Now, when you look at B to B, there leans a slightly more sophisticated than a B to C consumers. First of all, their payments are larger amounts. And with larger amounts, you see more regulatory and risk sessions. Now we, as a company, operate in about 190 countries and regulation is something that we take very seriously. A lot of these small businesses, they may not have the expertise when you deal with regulations across those countries. So that is an area that we bring and help small businesses if they have to meet their KYC tax and other obligations in multiple countries.

A lot of the B to B payments, also teams, what we call, happen to be cross border. And when you’re looking at managing FX or currencies in different countries, it becomes complex. So that’s, again, an area where we believe that we can help small merchants. And the third thing is B to B solutions also need solutions like invoicing. For example, how do you reconcile your payments? How do you know, “Hey, I made four pay, of what you call, four delivery students merchant, did I get all my payments?” And that’s, again, an area we have tools that we have built that helps small businesses.

Gene: Yeah, that’s great. I have a lot of B to B clients that do accept credit cards and we’re talking about just cash coming in now. And they grapple with different third party payment processing systems to do that. I was hoping you could explain, if one of my clients just goes directly with a PayPal, is it seamless for their customers? In other words, can they use a Visa Card, a MasterCard, Apple Pay, Google Pay, however they want to do it and can do it directly with my customer without them. How does that work? In other words, from my client’s point of view, is it just a seamless experience or is there hoops that we have to jump through?

Nitin: Again, very interesting question. And we believe in flexibility and choice. We believe that we should give consumers all the payment methods that are available and they decide how they want to pay. And let’s enable the most secure and fastest payments. So at PayPal, we support a lot of different payment methods. We have PayPal and the Venmo digital wallet and the Venmo wallet is something that is actually now growing in popularity with the younger demographics.

Gene: Yes.

Nitin: In addition to PayPal and Venmo, we also support credit cut costs. So whether it’s credit cards from your major networks or debit cards, we support all of those. In addition to those, we also support Apple Pays, Google Pays and other such wallets. So we believe in flexibility and choice and let the merchant and consumer decide what payment method works for them. In addition, we also believe that there are other new payment methods coming like crypto, like installments. And that’s why we are bringing these features to our PayPal wallet. And there are millions of merchants where you can pay with installments and crypto.

Gene: Yeah, I’m glad you brought that up. I wanted to ask you about crypto. A lot of people are talking about it. Obviously, when we talk about crypto, we’re talking about Bitcoin, Ethereum, Dogecoin. These are all digital currencies that are growing in popularity right now with more and more bigger brands starting to accept them. I do think they’re going to be commonplace in the next few years and the volatility of some of these currencies are going to become more manageable. I’m assuming PayPal has a plan for dealing with that. I was curious to hear where you think that’s going. Where do you think crypto is going to evolve to with your customers over the next few years?

Nitin: I think we are all about choice, right? And, as you said, we are very consumer and multi-centric. So what we heard was from a lot of consumers that, hey, they have cryptos and they would love to use it to pay merchants. Now, one of the challenges, I think, as you likely mentioned, is volatility, right? The crypto, the, what you call the Bitcoin price of the other currency prices can fluctuate a lot.

Gene: Right.

Nitin: A lot of these businesses said, “Hey, we can’t deal with that volatility,” because they have low margins. And if the currency fluctuates by 10%, their entire margin may be wiped up. So when we launch this product, what we said was, let’s do a couple of things. When the customer decides to pay with a crypto, we ensure that the merchant gets their full amount in whichever currency that they prefer, so it’s U.S. dollars, Canadian dollars or whichever currency they want. And what we do is we instantly sell their crypto at that point and we pay the merchant. So this gives certainty to both the consumer and merchant, because they’re not paying us after two days when the price would’ve fluctuated by 20% or 30%.

The second thing is crypto also has got a lot of compliance regulations in different markets. So what we did was we said, “Hey, merchant, you don’t have to deal with that. We’ll ensure that we meet all those compliance regulations in different markets.” They get paid in their preferred currency.

Gene: Makes sense. Yeah. That sounds like a way to really mitigate the risk of the currency risk of those kinds of fluctuations. You had mentioned previously, Nitin, also about some of your customers do invoicing or to have other functionalities, not just about payments. Obviously a lot of my clients already have existing ERP accounting systems, point of sale systems. Talk to us a little bit about integration opportunities. I view PayPal, whereas if you sign on with a PayPal, it is so widely accepted that there are third party apps, developers, many options for integrating PayPal with your website, with your accounting system, with other payment platforms, if need be. Can you expand on that a little bit and tell us about what your customers are doing to integrate PayPal with other of their applications?

Nitin: So I think our customers are using our payment methods in a lot of different, interesting ways, right? And we are open and we don’t have a preferred say that, “Hey, the customers, you only have to come to PayPal.” We are also working with hundreds of partners. For example, two years ago, as we launched our QR code solution, we’re very clear that, “Hey, if you have to expand quickly, we had to work with partners.” So in the very first month we signed over hundred partners who helped us scale QR code at a much faster rate.

We have extended that philosophy even online. So we work with a lot of different large platforms, whether it’s Shopify, BigCommerce, Ucommerce, to make sure that our payment methods are integrated into their platform, as well as different ERP platforms. So we believe in choice and flexibility. So we support merchants directly, as well as through partners.

Some of these partners sometimes brings value prop that we may not have at PayPal, or probably those value props are better suited for their businesses. So we understand that and we believe that we can’t be everything to everybody. And hence we have used this approach that we go and partner with ERP partners or third parties and provide our payment methods to them.

Gene: Makes sense. Now, a lot of my customers and my clients, if they’re evaluating a payment platform, I mean, they’re looking at PayPal. I mean, they’re also looking at other alternatives, your competitors. I mean, there’s Skrill, there’s Google Pay, there’s Stripe. I mean, I’m sure you’re familiar with those guys. What do I tell my customers, my clients as to this sort of competitive advantages that a PayPal would have? I mean, you’ve worked at PayPal for a while. You know the products pretty intimately, and I’m sure you know the competition that’s out there. So I’m not asking you to say anything bad about the competition, but I’m just saying how do you sell PayPal and persuade small business prospects and say we truly are better than our competition and this is the reason why? Can you give us some of your thoughts on that?

Nitin: Yeah. First I will, Gene, that competition is good because competition makes us get better every day and say, how do we be better than them and how do we serve our customers and merchants better? So we welcome all the competition. Here is what I would say to the merchants, right? I think we should give choice to consumers and we should make multiple payment methods available. Right? We do believe that we have earned the trust of customers and merchants. We have over 400 million consumers and 30 million merchants. So definitely doing a few things right. I think the advantage of using PayPal is a couple of … first of all, we give a wide variety of choices to our consumers. So we allow like in terms of payment methods, credit cards, debit cards, PayPal balance, we allow points. So if consumers have points with major credit cards, they can use those. We allow installments. For example, if a consumer has cash flow issues or he wants to break his purchases over multiple purchases, we do that. And we also allow crypto. So one is choice.

Second is safety and security, right? I think money is very personal and people are extremely worried about, “Hey, would my payment details and other things be safe and secure?” And that is something that we focus on a lot and something that we look at.

Third, I think it’s also brand trust. And I’ll share this example. This was, what you call, before I joined PayPal, I was actually interviewing for PayPal and I did not know this. My brother-in-law was getting married and my wife actually wanted to order a nice dress. And we were, at that time, in U.S., the marriage was in India. So she found a small shop in a state of Rajasthan, in India, where she wanted to buy a dress, but she was not comfortable paying because she did not know the store. And then she found the PayPal brand. And she said, “You know what? I think PayPal is going to take care of money. And if I don’t get the goods, I can trust in PayPal to get my money back.” So she bought the dress. She, of course, looked lovely. She looked fabulous in the photographs, but when I was interviewing PayPal, she said, you should join PayPal because I bought from that merchant because I saw the PayPal logo.

Gene: Wow.

Nitin: So that’s a personal example from 10 years ago.

Gene: Yeah. That’s a powerful statement on branding and consumer confidence, as well, is really important. You know it’s funny, you’re so good at answering these questions because it’s like everything Jon and I have been throwing at you, you’ve got like two or three bullet points to come back to, which is great. I’m enjoying this a lot. So let me throw another question at you because it’s the question that PayPal always gets and I always get with my clients and that just has to do with fees. So I’m not asking you to talk about specific, you know, what fee structure is and all that. But, clearly, there’s a fee that comes with using PayPal services and a lot of merchants, they have very tight margins so sometimes they avoid it.

I go to too many merchants. I live in Philadelphia and too many merchants that like, you know, they accept cash only or you can’t use your credit card unless you buy more than $15 worth of stuff, which is cra- so, you know, how do you explain to your customers the value of the fees themselves that you charge? I mean, I have certain explanations I give to my clients. I’m curious to see how you explain that to your customers.

Nitin: We are all in the business, right? And we understand that margins are challenging, especially for small business and other retailers, right? And we have different products available at different price points. So if you look at our QR product versus a point of sale versus others, we have different pricing. And based on your volume and industry, some of the pricing are flexible. We do take into account the needs of the industry. A lot of the pricing also helps us build better products, invest a lot in safety and security and other things. Now, what I would say is not look at pricing of a transaction, but the overall value to the business, right? I’ll give you an example. One is working capital, right? So as you’re working with PayPal, we can provide you working capital. And we believe our rates are very competitive compared to the banks. So you should look at that.

The second thing is we also have this card called a business debit card. That’s a product that I build in my past life. And that, basically, if you’re a small merchant, you can apply for a business debit card in U.S. We have the product in U.S. and Europe, and we are launching that in other markets as well. With that product you actually get one percent cash back. So if you do a hundred dollars of business, say PayPal is charging, you save $2 fees, approximately. But when that money’s in your PayPal account and you spend with your business debit card, you actually get one percent cash back so your net fees has reduced. When you look at things like FX and currency conversion, we have a piece which we believe are competition.

So yes, if you look at individual transaction piece, yes, we are probably on par with the industry. But we believe as you look at the equity picture of things like a money cash back that you get as you use the money with the much debit card, the lower cost of processing, when you apply for PayPal credit or working capital, as well as FX, I think it’s a compelling value.

Gene: Yeah. It’s a great answer. And, you know, I’m pretty sure … I have another question for you, but you know, Jon, I’m pretty sure I wrote about this on Small Biz Ahead. And if I didn’t, then I got to get with Hannah and write a piece because there’s, Nitin, there’s also from an accounting perspective, because I’m an accountant, if you’ve got the data of what your transaction fees are, if you’re tracking them separately and you can look at that over the course of the year, you can spread that cost over all the products that you sell. So if you’ve got a deli and you’re making sandwiches and you’re charging $7.25 for a sandwich, if you charge $7.28 for a sandwich, you know, for all the sandwiches you’re making, would likely if you do the math right, probably cover those additional fees. And obviously customers, aren’t going to walk away if you’re just charging 3 cents more, you know, for a sandwich.

I guess my point is, and for those of you listening to this, you should talk to your accountants and you should be looking at your overall business P and L and you should be factoring in tracking these financing costs, these fees with PayPal, whatever credit card service you’re using separately. You can bake this cost in to your pricing and make it seamless across all of your products and, therefore, you can accept those additional fees that you’re paying for the convenience and for the additional business and sort of have your cake and eat it as well.

Jon: For January that I, Jon Aidukonis, am not the first to make a restaurant or food reference on the first podcast.

Gene: Good point.

Jon: That is not common so I think we should memorialize this day.

Gene: Yeah. Nitin, he’s right. You see Jon comes from a restaurant world, so he knows all about restaurants and he always talks about it on this podcast. So I guess I got my first reference in now, right?

Nitin: Yeah. And I’m going to add a story about the food now. So yesterday was my birthday and we decided to stay at home, but definitely get food from my favorite restaurant.

Gene: Yeah.

Nitin: Unfortunately, I went there, and I forgot to take my wallet. It was raining, I was worried about, “Hey, I have to wear a mask. Omicron is spreading. Should I go or not?”

Gene: Right.

Nitin: And I went to the restaurant and the person said, “Hey, if you’re paying cash, you get x% discount.” And I said, “Unfortunately, I forgot to get my wallet.” So I used my PayPal mobile wallet to make a payment, but that’s also in conversion in sales. Right? And every incremental sale drives margin. So I think the convenience and the overall way you look at the business, I think trumps this.

Gene: A couple comments on that, which is interesting, because I do see that frequently in places I go to. They’ll give you a discount if you pay something in cash. I’m a big supporter of that. Like, listen, you know, you’re giving options to your customers. So I know, okay, fine. If I’m paying cash, I’m going to pay 3% less. That’s up to me. I like that. At the same time … and also in the states in many cities, there is a lot of sensitivity towards companies or businesses, merchants just going all credit card cashless. I remember, I forget it was Sweetgreen that were going to do that and then had to pull back on that policy because it could be discriminatory so you really do have to balance all of that.

But I do think you can have your cake and eat it too, and be able to charge the … take your credit card and if you do your costing the right way, if you’ve got a good accountant, you can figure out how to keep it as part of your prices, nominally, and move forward with that. Listen, you’ve been doing this for a while. You’re up to your eyebrows in mobile payments and this digital world. I’m curious to see where you think it’s going. If you and I had this conversation five years ago, I bet you would’ve said to me like, “Oh yeah, Gene, in five years, there’ll be no more credit cards. We’ll just be paying off our phones, you know, whatever.”

And even now, like, if I try to pay something with my phone, with an app, 50% of the time the store doesn’t know what to do with it or I look like I’ve got antenna coming out of my head, but I do think it’s going to happen at some point where we’re going to rid of plastic cards. So you’re in the industry, where do you see this going for merchants? If I’m running a retail store, a restaurant, or even a B to B business, what should I be preparing for in the next few years?

Nitin: I think mobile product is going to go a lot. Right? And especially with the onset of pandemic, things have changed and accelerated. There was a recent study that I think Forester shared with us that said 45% of the consumers did more mobile payments in a month pre and post pandemic. Now, if you look at QR codes also, right, two years ago, a lot of consumers in U.S. were not aware about QR code. And that’s a technology that has existed in the industry for decades. And in countries like India and China, you can see a lot of adoption, but now every restaurant that you go towards has a QR code and that I think has made their operations much more efficient earlier. You now just go and sit at the table, you scan your QR code, you order your food, your server brings your food and then you pay for it digitally and you’re done. So you have actually made the, what you call, reduce the cost of labor, the cost of printing menus and made it much more efficient.

And this is not only happening with the younger demographics. I see that happening with that older demographics as well. Also, I see a lot of new trends. Now, I think buy online, pickup in store or order ahead, has really accelerated, right? And now people find it to be much more convenient. You are sitting at home, you order things online. Then you go to the store and pick it up and then you may go and buy a few other things as well. I was not comfortable buying grocery online, but the pandemic taught me to do that so I think mobile and in-store experience are going to converge as we go ahead.

Again, as I said, I do see all these payment methods existing but what I do see is businesses that adapt and bringing online and in-store experiences together, having mobile and other such payment methods and digitizing the customer experience would be good. The other thing I’ll talk about is loyalty cards, right? A lot of us have got loyalty cards and coupons, and I think I have gone to store a lot of times and said,” Hey, I have this coupon at home. I forgot.” Right?

Gene: Yep.

Nitin: And you probably did not get the benefit of that. So one of the things that we are doing at PayPal is we are allowing you to add your loyalty cards to our PayPal wallet. So very soon when you are going to pay at a large grocery store, your loyalty card is automatically applied and you start earning points.

Gene: Great.

Nitin: And we’re also working the retailers to store their coupons digitally that can be applied automatically. So these are ways that we are bringing value to the consumers and value to the merchants because, hey, if the customer continues to owe loyalty, they know who the customer is. They build relationship with the customer and then they can send them more offers and, what you call, drive incremental sales from them.

Gene: You know, one of the other things I also want to mention, just get your thoughts on when you talk about the future. Like, you know, PayPal’s CEO, Dan Schulman, because I wrote about this just recently, said there was like a 400% increase in buy now pay later transactions as well, you know, which is … and buy now pay later is like … Jon, our grandparents used to do that. They called it the layaway plan, you know? They would buy a sofa and they could paid off in three or four months.

Jon: I have used layaway. I do miss my K-Mart Bluelight specials.

Gene: Yeah. Well, it’s all back to like layaway and, and big firms like PayPal and a firm and a few other ones are offering these buy now pay later plans where people instead of using credit card can do that. Nitin, do you see that as a continuing job, it was big this holiday season. Do you think that’s a passing trend or do you think that’s something that business owners should be really paying attention to?

Nitin: I think business owners should be paying attention to it. My belief is, especially what happened was after 2008 financial crisis, a lot of people were worried about credit cards, the fees and things like that. So I see adoption of buy now pay later very strong among the younger demographics, right? So they currently use debit cards and when they want to split the purchases over multiple paychecks are ones they use buy now pay later. Now some of them are also translating towards credit card.

So I think all three of them are going to say, we actually see consumers adding multiple instruments to their wallet. And sometimes they pay with debit cards, especially if it’s for everyday purchases. They’re making some larger purchases based upon the type of credit card they have and the number of installments they need to pay. They either choose between credit cards or buy now, pay later. So I think buy now, pay later is something that’s going to grow. And we realize the importance of it. At the same time, we are also doing it in a very thoughtful and responsible way because eventually a lot of these installment we add up and we want to make sure that our consumers are not in a situation where they cannot pay. So that’s the balance we are trying to do. And that’s one of the reasons why we also eliminated all the late fees for our consumers and buy now, pay later.

Gene: Right. I’m really glad you brought that up by the way. And thank you. I think a lot of merchants have to realize that you’ve got to look out for your customers and, you’re right, this is popular among younger customers. And sometimes I do fear that sometimes younger buyers don’t realize that with buy now, pay later if they don’t pay off the balance in three or four months, interest rates or fees or penalties, whether it’s PayPal or any of the other services that provide this could be significant and could even hurt your credit report in the future. So anyway, you got to be careful using this. It’s a great, great option, but consumers have to be careful with it. I think, as business owners, we have a responsibility for making sure that our customers are aware of that. So then I’m out of questions right now. Jon, let me turn it back over to you. If you have any final questions, if you want to take this thing home.

Jon: Yeah. I don’t think I have any more questions, but I do think it’s just been a really helpful conversation for our listeners. I think as we think about what’s new and different and kind of should be top of mind for people, I do think payment diversity and making sure you can transact the way your customers want to transact is important. I think, especially as we continue to get more and more cashless, it’s just interesting to learn about the different opportunities out there and how it’s more than just a bank deposit these days. So, I really do appreciate you spending the time with us. I think, you’ve had a lot of good considerations to share with our audience and I very much appreciate your insight and advice.

Nitin: Thank you. I’d just like to say a message. I would like to wish all of you, again, a great 2022. And I think at PayPal, we put customers in the essence of the heart of everything that we do. So we would love to hear from you, your feedback, your ideas, your things that are not working well for you, so that that can help us make better products.

Jon: Awesome.

Gene: Thank you, Nitin. Thank you.

Jon: Yeah. Thank you very much. And thank you everyone for listening. This has been another episode of Small Biz Ahead presented by The Hartford, and we hope that your year is off to a great start and we’ll catch you on the next one.

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