All right. We're going to get started here. We're happy to welcome Doug Bland, who's the head of the consumer business at PayPal. He's been at PayPal for more than five years and came over as a part of the acquisition of Swift Financial. Doug has more than 25 years of financial services experience, which is great. Maybe we start with a little bit about your background. You know, maybe some people aren't as familiar with you, maybe you could just talk about your background and specifically your responsibilities today at PayPal.
Yeah. Well, first of all, Sanjay, thank you so much.
You got it.
F or having PayPal here. It's such a great privilege and opportunity to speak to everyone, we're really excited to talk about the momentum and the opportunity that we have, in particular on the consumer side of the business. As Sanjay mentioned, I'm responsible for the consumer side of PayPal. Maybe to step back, about a year ago, it was May of last year, we went through a bit of a operating model change where we created more structure around our two-sided network that we have. We created a consumer business unit. We consolidated all of our consumer products together, which now I have end-to-end accountability around.
The purpose for that was to streamline our decision-making, to create greater focus, and to also think about customer journeys holistically and not just from a product lens. So we wanted to break down the silos of thinking about, you know, from a customer standpoint just from a product, but across holistically all of our products. We also did something similar on the merchant side, so there's a corresponding team on the merchant that side that is driving all of the relationships, all of the integration and products that we have. Obviously, the consumer and merchant teams work hand-in-hand with each other. So that is my role since May of last year as we reorganized ourself internally. Also, as you mentioned, I've been doing this for over 25 years.
I've been in financial services now for a long time, you know, helping customers, helping consumers, helping small businesses is what I've made my career about. I've worked in different sized companies. I've spent, you know, a decade at one of the largest financial institutions within the US I worked at a super regional bank for a while, but I've also done startups as well. I was part of a VC-backed startup, which we ended up selling to PayPal.
Right
Just in September of 2017, and five years later, here I am. I'll just say that it's been an incredible journey. You know, I've seen so many economic cycles. I've seen so many ups and downs and different company cultures. You know, PayPal's culture, I would say the mission that we have around democratizing financial services is very inspiring. When you look at just the opportunity we have, it's really exciting.
That's great. Maybe you could talk about some of those opportunities, you know, as you've stepped into your role, and maybe also some of the areas that you think could use some improvement. Maybe just talk about that.
Yeah. Absolutely. You know, thinking about opportunities of PayPal, in general, our brand has been around for two decades now. We separated from eBay just a little over eight years ago. Everyone, you know, knows the growth story that has been created here and frankly has created one of the world's largest open digital payments platforms. We have over 400 million consumer accounts. We have over 35 million merchant relationships. With that's our two-sided network that we talk about, is bringing our consumers and our merchants together and creating value for each other.
When we step back and think about, you know, from a strategic standpoint as a company, we like to think about the spaces that we operate, and we think about commerce, payments, and financial services. If you can envision these spaces as concentric circles, and those concentric circles converge and intersect with each other, commerce, payments, and financial services, at the center of that, we think about our branded checkout business. That is core to what we do. Everything that we're doing from a strategic standpoint is really how do we reinforce our branded checkout business? How do we create value for our consumers to want to select PayPal at the point of checkout? That is our hyper-focus.
When we think about what we're looking at, especially as you shift from a consumer standpoint, it's all about supporting that branded checkout. Again, you know, I mentioned we have a merchant team, we have a consumer team, and it's really us working together to drive that. From a consumer standpoint, to get very specific, it's around driving customer engagement. We are hyper-focused, that's the improvements we can make. We have to drive more customer engagement. We're hyper-focused on that. How we're doing that is through optimizing, you know, existing products, hardening our process and capabilities that we have, as well as enhancing value propositions. There's so much growth that's left in front of us when we think about customer engagement. That's really the focus of the consumer business.
Great. Maybe we start with the digital wallet. Obviously, you guys have a leadership position, but there's a number of different entrants to the field. What do you think you guys are doing effectively today to stay in front of that so that you stay relevant? How do you see the experience evolving over time as there's more competition?
Well, our digital wallet is so critical to our strategy, especially from a customer engagement, and I will talk about our mobile app, you know, quite a bit today, and why it's so important that we get our customers to adopt the mobile app for PayPal. Maybe just, you know, stepping back a moment and thinking about competition, thinking about our position in the space. Foundationally, if you really think about the value proposition that we can offer to consumers, it's we're playing from a position of strength that has been built over 20 years. We've created this global reputation around trust, around security that we provide to consumers. That is so foundational to what we can offer, especially as more and more consumers are moving to digital wallets.
They have to be able to trust, they have to be able to feel secure when they're adding things, you know, adding funding instruments into their digital wallet that their information is going to be safe. Another example is if you're making a purchase in a cross-border trade transaction, you're buying from someone that you don't know, can we provide the buyer protection to make sure you're getting what you're looking for? These are things that PayPal has been building for over 20 years, and we continue to invest in that. We continue to reinforce that. Things like risk and identity is a real competitive advantage that we have. We believe that there is incremental opportunity to further enhance the value proposition around trust and security.
We have several hypotheses that we are building experiments around to further improve this value proposition around trust and security. When we think about where we sit from a competitive position standpoint, we feel really good, and the data supports it. If you look at all of the surveys on a global basis around trust in digital payments, PayPal is always at the top of those lists, we feel real good. From a mobile app standpoint, you know, thinking about digital wallets, Sanjay, to your question, what we are looking to do is to make it easy for customers to send, receive, spend, and manage money. It's really as simple as that. We want to make it seamless.
We want to make it delightful, but we want to do it in context of relevancy to those customers. We're thinking about where are those customers in their life cycle? How do we position products in a way that really adds value to what they do? We are uniquely positioned, just given the scale of our platform, is to bring that value to customers. That's something that we're hyper-focused on delivering as we look into this year. Our operating model that we have shifted to is all about driving experimentation, rapid experimentation to test and learn and to drive that further value for customers, which then drives engagement, which then is going to, you know, create the financial outcomes that we are looking for.
Maybe to end on the mobile app, let me give you know, a few stats of why it's so important to us. You know, from a value standpoint, we see those who adopt the mobile app, they produce 30% more average revenue per user than those who do not adopt the mobile app. We see about half the amount of churn, so it's very sticky. It's very valuable for us. The mobile app users are 2x more likely to use PayPal at checkout. We also see 60% more transactions per user who adopt the mobile app. This is very important to us, and we're hyper-focused on driving that penetration. Today, over half of our users have adopted the mobile app.
It's in the mid-50% today, and we're going to grow that double-digit percentage-wise this year. We have some very specific things that we're doing to further drive that.
How do you do that? Like what are some of the initiatives?
A lot of it is a lot of hygiene things, a lot of optimizations that we're doing around product flows, around the onboarding experience. There's enhancements to value propositions that we're looking at. For example, we're ramping package tracking. One thing that we know that customers do when they, when they open their mobile app is they go to their activity feed, that's the most common place that our customers go to is looking at, well, what transactions have I made? We are introducing the ability to track packages within the app as well. It's just an example of where we want to move customers and away from even a monthly active user, but weekly and even daily. What reasons can we give customers?
What value can we provide consumers to actually want to open their app on a daily basis?
Right. You, you talked about initiatives to drive engagement, past several years, I guess. You guys introduced crypto, savings account with Synchrony, had the Honey acquisition, Bill Pay. Maybe you can just talk about the relevant or the relative importance of each of these initiatives and where you've seen the most success?
Yeah. We are, you know, we're constantly trying to drive relevancy for our customers. Again, going back to the purpose of the mobile app is to make it easy and relevant for, you know, consumers to send, receive, to spend, to manage money. When we think about things like spend, we acquired Honey a few years ago as an example. Bringing in savings to customers as they go through the shopping journey, as they go through commerce. You know, last year, for example, through deals and coupons, we saved over $200 million for our consumers who were using the PayPal Honey browser extension. That's a good example of, you know, some of these capabilities that we're bringing to our customers.
Savings account, you know, you mentioned is another example where we partnered with Synchrony Bank to bring forward a high-yield savings account. What we are seeing, I would say that, you know, both us and Synchrony are very pleased with the results that we're seeing and the adoption and the overall performance of that product. We're seeing on the PayPal side too, about a 20% lift in average revenue per user as they're making more transactions across the platform as they're bringing in money. It's really trying to find relevant value propositions that we can offer up and extend through the mobile app that matches the, you know, life cycle of each of our customers' journey.
obviously, over 400 million accounts, obviously we're thinking about this from a segmented way as well.
You recently rolled out a rewards program. I think that's a great idea. I'm just curious, like how you feel it's done so far in terms of driving engagement and developing habits.
Well, last quarter, at the end of last year, we announced a PayPal Rewards program, we really view this as a key engagement driver for us. We're testing, you know, many different variants of how this will work. What PayPal Rewards is today is putting together some disparate rewards programs that we had previously. We had something through our Honey acquisition called Honey Gold. We had a PayPal Gold, and it's really acquiring points based on, you know, activity and purchases. We rebranded that into a single currency, which we call PayPal Rewards.
We are looking at this, really as a driver of engagement, and how can we do this in an ROI positive way, that, you know, is creating value for our customers as well as, creating value, obviously for us, as well, and drive that engagement.
an interesting test I will tell you about, and we've got multiple tests running right now to understand how we scale this over time. We have some really fascinating hypotheses, and I think that there's a lot of optimism on what it can do overall. Our customers tell us that we have the right to offer a PayPal Rewards. One of the tests that we performed last quarter was what we call a stretch test. It's basically going out to low-engaged customers. So you know, selecting a specific cohort, doing test and control around it, and seeing what the lift is. It was saying, "If you do three or more transaction, you get $5 or five points," which translates into $5 cash back.
The lift that we saw out of that was very strong, and we see it sustaining as well. You know, positive ROI. These are the type of testing that we're going to be doing throughout the first half of this year and really scaling into the ones that make sense. We think that PayPal Rewards is really going to be a key driver of engagement.
It makes sense.
Yeah.
Maybe we move to P2P. Obviously, that's an area you're looking to reinvigorate growth. What are some of the things that you could do to really achieve that?
Yeah. That's a great question. P2P is a foundational capability to both our PayPal and Venmo brands. It is so important to driving customer engagement, so sending and receiving money. Obviously, the fact that we need customers to feel the trust and the security of sending and receiving money is critical. The other importance about P2P, both on PayPal and Venmo, it is a very solid on-ramp to driving new customers onto these platforms. We are investing heavily on ensuring that we have seamless experience flows that we're investing in risk and identity to ensure that, you know, that security there is, that we're, you know, driving the right amount of conversion, you know, from a P2P standpoint on both of these products.
I'm sorry, both of these platforms. An example recently that we rolled out on the Venmo platform for P2P is we changed the overall user experience on the pay sheet. As you are it's ramped to 100%, and hopefully a lot of you are Venmo users, and you'll see a very different user experience from a pay sheet standpoint. This is. We label this as part of our optimization, efforts, the hygiene efforts of just driving these products. That single improvement will drive an incremental a few billion dollars in TPV this year.
We just see these lists as we continue to improve experience flows, as we continue to think about the risk side, the identity side of our business, and how do we make it seamless to send P2P. In addition, we have to enhance value proposition as well. There are several initiatives going on that tie our, you know, P2P businesses between PayPal and Venmo is how do you further integrate value propositions across different products. One of the, you know, an example of a test that we did in one of our European markets on the PayPal brand side is we introduced instant messaging within the P2P flow.
Why is this important? We actually saw a nice lift in conversion and retention within that market that we tested this, and we're looking to, you know, potentially roll this out more broadly. If you're wanting to send a P2P transaction, and let's say you're buying some type of product from someone you don't know, the ability to do that secure instant messaging back and forth, and what we see was a bigger lift in conversion.
We see, both from our consumers as well as the merchants, the small businesses and side hustlers who are using P2P for transacting activity, they really like this feature. It's not only looking at optimizations of flows, but also how do we improve and uniquely create value propositions that are greater than what exists today.
In the background, does PayPal and the Venmo platforms talk to each other?
Today we are separate, but we've been going through a multiyear journey of creating convergence, you know, from a platform standpoint. We're still another year or so away from creating all of that capability to come together. You know, for example, identity this year is a big focus for us.
It is driving some significant results. Also, when you think about the teams who are working on it, you know, when we made the change of consolidating all of the consumer businesses together, that was a big synergistic benefit as well. Because as teams, we're now all sitting together and talking about the things that we're doing on the PayPal brand side, the things that we're doing on the Venmo brand side, and in the background from an engineering standpoint, same thing. How do we build it once and then leverage it across the two different brands?
Right. Maybe we dig in a little bit to, on Venmo. Could you just remind us what the key monetization drivers are and how you expect that to evolve over time?
Yeah. We have very specific strategic focus around continuing to grow this successful platform that has been built up over the past few years. As a reminder, we have over $90 million 12-month actives on the Venmo platform as of the end of 2022. We have approximately $58 million monthly active users. It's a highly engaged platform. Arguably, it's the largest P2P platform in the US in terms of, you know, monthly active users. Very engaged. We've been on this journey of driving, you know, incremental adoption of our products, which turns into this monetization play for us as well. It's really based on what we're hearing from our customers.
What our customers tell us is they want to spend more of their financial lives on the Venmo platform. What are the products and the capabilities that we can provide to those customers to do that? Over the past couple of years, you've seen us launch things like a Venmo Credit Card with our Synchrony Bank partners. We launched a Venmo Debit Card, a direct deposit capability, and we're continuously refining those capabilities, as well as thinking about how do we tie that back into P2P as well. We have a three-pronged approach of doing this. The first is enhancing our P2P business.
P2P is that consumer flywheel that really drives all of the engagement for Venmo, so we have to continuously invest in that and improve that overall experience. The second piece of this strategy is everyday spend. It's, again, trying to answer the requests that our customers have around how can I, how can I do more on the Venmo platform? These are the products that I'm talking about. I'll give you another example of maybe how we are tying together everyday spend and P2P with each other from an integrated value proposition. That's something that we are testing right now. It's a new enhancement that we're bringing to the Venmo platform, and it also increases our total addressable market within the US for Venmo, and that's a teen account.
As a father of a 15-year-old, who has constantly asked me, "Dad, when can I get a Venmo account?" I'm really excited to say very, very soon. In fact, we're testing this internally right now. This is the capability of, you know, creating parental controls, to be able to allow teens to learn how to P2P their friends, to give teens access to a debit card, in a very responsible and controlled way. It gives us an opportunity as well to help around just the financial responsibility of how you spend and manage money, from a Venmo brand standpoint. From a total addressable market, when you look at 13 to 17-year-olds within the US, that's 25 million new potential customers for us.
It's significantly increasing what we can go after. We do know about 9 million of those teens today, their parents are already Venmo customers. Think about the opportunity to now go to those existing Venmo customers and talk about providing this teen capability. That's, it's an example of what we're doing, you know, when I talk about the three-pronged strategy of enhancing P2P and everyday spend. The last piece of that strategy is around driving commerce. Driving commerce is really think about that in two parts. One is our Pay with Venmo capability, and the second one is Venmo business profiles.
Pay with Venmo, everybody should have heard about, you know, late last year, we announced a partnership with Amazon to launch Pay with Venmo, and we're really pleased with the progress that we're seeing. Both teams are meeting on a daily and weekly basis, continuing to ramp the capabilities of that. That's something we think long term is going to be such a important strategic partnership for us, and we feel really good. There are also, you know, when you look across the 35 million merchants that we do business with on the PayPal side, they all want to get access to the Venmo customer base.
Our customer base tends to skew younger. It tends to skew higher income as well. It's very attractive, you know, for our customers. That's the reason we launched, you know, Pay with Venmo because our customers also say, "We would like to do more on the Venmo platform. We would like to be able to pay merchants through this." What we do recognize is we have to further improve the consumer value proposition. We have to give our customers more reasons why to choose Venmo. When we step back and think about the strengths of our business, between risk, identity, credit, there's some natural enhancements that, you know, we can make to further improve the value proposition that, Sanjay, hopefully you'll invite us back in a few months, and we can talk more about that.
We're real excited about the future of Pay with Venmo. Finally, Venmo business profiles. This is a capability we launched a couple of years ago, and we think that there's significant growth opportunity for Venmo business profiles. This is the ability for small businesses and side hustlers. The side hustler segment is so important as we're seeing through all of the economies, in particular in the US, so many consumers also now have a side hustle. This allows small businesses and side hustlers to actually open a digital storefront within their consumer Venmo app. It separates the spending, the sending and receiving of payments between your consumer and your business. It is a separate ledger, but it's all integrated into a single app.
It's a very elegant solution, and we think that there are quite a few opportunities for us to further enhance that by bundling additional payment methods, by creating, like, invoicing-type capabilities for these businesses within the app, as well as creating discoverability through the activity feed of Venmo, especially on a local basis. Our customers are constantly talking to us about, "We would like to know more about how I can use Venmo, especially in my local communities." Venmo Business Profiles is not just about online shopping, but also in-store. It's truly an omni-channel type play for us. Just to, you know, summarize, enhanced P2P, everyday spend, and driving commerce is the focus that we're doing to really drive the next level of growth for our company.
That's great. That was very thorough. you know, obviously, the Amazon partnership's an exciting one. Could you just talk about the rollout and what some of the goalposts are?
Yeah. I think that the rollout went very good in terms of late October, early November, when we first started ramping the product. As we got into the full breadth of the holiday season around Thanksgiving timeframe, we got closer to 100%. We are being very deliberate around how we are positioning this. We're seeing strong demand about customers wanting to link their account. We're working through some of the authorization strategies that we're putting in place and hardening the process between that.
I think that the success that we saw through the first two months, through the end of 2022, Amazon and PayPal met the objectives that we both laid out in terms of what we were trying to achieve and the number of linked accounts, the number of activity that we were looking to pull through. I think with the enhancements that, you know, I'm talking about in some of the consumer value propositions that we'll be bringing later in 2023, is just going to further drive some of the volume that we see. We have a incredibly robust roadmap.
With the Amazon team and further improvements that we're going to be making in capabilities.
Great.
Yeah.
I want to shift gears, talk about buy now, pay later. Obviously, that's been growing quite nicely, and you're seeing a little bit of a dislocation in the market relative to your competitors. Maybe you could just talk about, you know, how buy now, pay later has done relative to your expectations, how you see the growth trajectory evolving over the course of the next couple of years given what's happening in the environment.
Yeah. Great question. It's something that we are extremely proud of in terms of the rollout of our buy now, pay later products, and we did this just two and a half years ago. You know, you could say that we were a late entrant to the game. Several of the major players had more than a decade head start on us. We're very pleased with how we are, you know, serving our customer needs, how we're serving merchant needs with this product together and the results what we are seeing. In two and a half years, we've had over 30 million unique consumers use buy now, pay later. We're in seven different markets around the world.
We also are seeing, of those 30 million users, we've produced over 200 million loans. They've used it 200 million times. It's created quite scale. Most of these users are existing clients, existing customers of ours as well. We have a rich set of proprietary data that we can use to do this in a very responsible way from a lending perspective.
We've always focused on that. In fact, if you back up, you know, PayPal has been in partnerships around lending since 2004. Even though we're a new entrant two and a half years into the buy now, pay later space, you know, we were doing offering lending services through our platform since 2004. In 2008, we acquired Bill Me Later, and we actually have organic, you know, risk and underwriting capabilities. We also partner appropriately with different banks around the world where it makes sense, as well as being very focused on regulatory requirements on this product. The other thing that we're really proud of is those 200 million loans that we've issued has come across 2 million different merchants.
Of those 2 million merchants, over 300,000 of those actually do upstream presentment of buy now, pay later for PayPal. That's really important. It's, it, you know, it's a win-win for our customers. It's, it, you know, it's a win for, obviously, our merchants because what we see is our merchants actually purchase about 30% more on PayPal when they adopt buy now, pay later. When we look at the performance of our credit book, we feel very good about that. Again, it's based on the proprietary data and the prudence that we are taking in making, you know, these yes, no decisions.
The model that we've created on the short-term loans that we offer is interest-free, you know, for our customers, and we don't charge late fees. We felt that that was really important in terms of how we structured these products. How we are benefiting as a company is because of some of the figures that I just quoted. This drives incremental halo for our branded checkout business. It's becoming such an important part of reinforcing going back to, you know, what is the core of our strategy. The core of our strategy is reinforcing that branded checkout business, and buy now, pay later is doing that. When you think about the product suite that we've developed over the past two and a half years, we have short-term buy now, pay later products. Within the US
market, you know, if you want to make a purchase, you can divide it into four payments. It's a down payment and then three payments every two weeks, is how it works. Late last year, we also created a long-term installment product as well. If someone's wanting to purchase, let's say, a treadmill, it may cost $1,500. Instead of paying for it over a six-week period, they want to be, you know, budget it out on very fixed payments over a 12 or 24-month basis, then we'll allow customers to do that. From a merchant standpoint, we're covering the spectrum of goods that customers can buy from them. From a customer, you know, perspective, they really value the budgeting aspect of this capability. We're also just.
Maybe if I could add just an enhancement that we're making to buy now, pay later, is thinking about taking this in store as well. You may remember we announced late last year the agreement with Apple to be able to bring our PayPal-branded and Venmo-branded credit cards and debit cards into Apple Pay. We are working through that ability to provision those cards and be able to go in store and use your PayPal-branded, Venmo-branded card products in store. We are also looking at creating a digital token through Apple Pay for a one-time single use for buy now, pay later transactions. Sanjay, if you wanted to go in store and use a Pay in four capability, you would just go through a simple process.
Perhaps we would even pre-approve you for an amount that you can use, and then you go in store and use it through Apple Pay. We're really excited about expanding the ability to offer this value to our customers both online as well as in store.
I'm going to see if the audience has any questions. There's a hand raised over here. We've got a couple of minutes left, one minute.
Hi, Doug. Thanks for the presentation today. Just quick question I have, and really the only barrier I see PayPal still hasn't overcome yet: How do you adapt to the fact that commerce, for e-commerce at least, is moving more away from traditional desktop and more towards a mobile environment? 'Cause if you're shopping on, like an iPhone, for example, when you're going through the checkout flow, Apple Pay is always the default method of payment that presents itself first. As more and more consumers stop using their computer and more use their phone to shop, how is PayPal addressing that?
Yeah. I would go back to a lot of the comments that I made previously around one of our primary focuses from a strategic standpoint is driving mobile app adoption. You know, go back to the trust and security value proposition that we have such an advantage around of this 20 years of experience. Looking at the penetration that we've already made into our user base as well as further driving that as going forward, we think that we frankly are well positioned as we see consumers move from desktop into mobile app, especially from a commerce standpoint. We also know that, you know, as I mentioned on an in-store capability, by creating this agreement with Apple, we will also have PayPal value propositions as part of this solution from an in-store capability.
There are numerous things that we're doing around creating a seamless experience from a risk and identity standpoint, even shopping online and how you can use your mobile app. I think it's a, I think it's a great question and one that we are hyper-focused on, ensuring that, you know, we have the competitive strength to continue to grow in this space. We are seeing some good things happen.
All right. I'm sorry. We're going to have to end it right there. Thank you so much, Doug. Appreciate it.
Thank you, Sanjay.
Welcome.