Okay. Thanks everyone for joining us, both in the room and online. Super excited to have Srini here from PayPal, who's the Chief Technology Officer. Reason being, I have a little bit of a tech ground, having run a fintech platform before in the pay by bank space. I'm really looking forward to getting some good insight from you. Really, there's so much of PayPal's turnaround story that revolves around the technology. This is going to be a super topical conversation that not only I think provides us with good information for now, but good perspective on how the next couple of years are going to go, as well. Welcome, Srini. Thank you very much.
Thank you for having me here, Adam.
Yeah, our pleasure. You started at PayPal in 2024?
Yeah.
Right?
Two years ago.
Two years ago. Does it seem more like than more than two years or?
Well, time flies by.
Lots of change going on.
Yeah.
Obviously. Let's start from a 50,000-ft perspective. As CTO, you walked into PayPal, what were some of your first impressions about strengths and some potential opportunities?
I think even before I walked into PayPal, when I was interviewing for the role, I wanted to make it clear that we had put all technology under one roof. That had never happened at PayPal.
Yeah.
We needed to streamline. That was an important piece. Having done this in my previous company, it made a lot of sense to really have everything from the infrastructure to the data, to all the way to the product engineering-
Yeah.
To be streamlined. That was a conscious decision PayPal made, and that was something that was important for this to succeed. That was the first piece. Once I came in, I was kind of little bit seeing the multiple versions of identity, risk, and all these platforms. I felt like there were so many snowflakes within the company. One of my key messages when I started was, let's try to standardize. The standardize doesn't mean we need to depend on each other. We need to have our terminology, which I call loosely decoupled, highly aligned. How do we standardize our systems? How do we build core platform capabilities that we can leverage across all of PayPal? That's kind of the journey. That was my initial observation coming into PayPal.
Interesting. Let's dive in a little bit to those challenges. I think the prevailing sentiment out there is that PayPal has a considerable amount of technical debt.
Yeah.
Whether it's database integrity, latency issues, prior acquisitions that weren't fully integrated, et cetera. Is this an accurate perception in your view, or are there some clarity that you can offer on the internal tech debt, and then we can discuss the external?
Okay. Let me kind of split it into two pieces.
Great.
The first one is what I call the standardization piece, which I mentioned. Our identity infrastructure was kind of fragmented, or I would not say fragmented. We had multiple versions of identity.
Yeah.
What it meant was you onboard on one product and you try to onboard on a different product, it would create a lot of friction. As if we had amnesia about the customer.
Yeah.
You have to do the same thing again. That was the same case with risk and compliance platforms and so forth. You can call it tech debt in that we had multiple versions of it which means we had to build it three times, or we had to maintain it three times.
Yeah.
So-
Sounds familiar.
So-
PTSD.
PTSD, right.
Yeah.
What we did was, we said, let's take the consumer side first. I wanted to prioritize and do it in a consistent way. You look at PayPal, you look at Venmo. They have pretty much a similar wallet that have shared underlying infrastructure. We decided let's converge identity, and we started on converging identity between Venmo and PayPal. That took us about six to nine months. As we finished it, the beautiful benefit out of that was MFA came in, multi-factor authentication.
Yeah.
It was enforced. PayPal had MFA already built in.
Yeah.
Venmo did not. If we had not merged it, Venmo would have to build this complete thing again.
Right.
You could call it tech debt because you're now building it twice.
Yeah.
We were able to just get it up and going really fast.
Yeah.
We have now started doing the payments convergence, where we are bringing in the payment system between PayPal and Venmo to be the same rails.
Yeah.
The beauty of that would be Venmo would now get the better authorization rates. It can go international if it needs to go. It now give more credit products that are available on the payment platform. That was kind of a tech debt-
Yeah.
That we felt.
Yeah.
I think that's been addressed that way. The other form of tech debt is what you talked about, which is Oracle and databases. That was important because what happens is databases create a center of gravity because it's very chatty, and it cannot be changed very fast for really going high speed innovation.
Yeah.
We are now embarking on a journey to completely go cloud native on our PayPal platform. That's the second way of how we are addressing the technical debt right now. Braintree and Venmo, we have already made it cloud native, and they're already up and running in the platform.
Yeah.
Now we are now tackling PayPal right now.
Okay. If you get that database integrity solved. That unleashes a lot of flexibility-
Flexibility.
To build on top of that.
Yes.
That's the foundation of a house, right?
That's the foundation of the house. Right. If you're familiar with Oracle databases, you have to tune it, you have to cache it. You have to build a lot of things.
Yeah.
20 years ago when PayPal started, that was cutting-edge technology.
Right.
We are one of the best users of Oracle, so no doubt about the technology that we use, but that's table stakes right now.
Yeah.
If you go to any hyperscaler Google, AWS, Microsoft.
Yeah.
It's out of the box.
Yeah.
I call it running on the shoulder of the giants.
Yeah.
Let's just reuse the platform as a service and let's innovate on top.
How long do you feel like the transformation on the database layer will take?
I see it takes a couple of years. Right.
Okay. Yeah.
The reason is there is code migration, and then we are also changing the engines on the fly while we are operating this huge payment network across multiple countries. The data migration is going to be the one that takes a while.
That's the tricky part.
Yeah, that's the tricky part.
You can't mess that up.
You can't mess that up.
While you're flying the plane.
Yes.
Yeah. I feel for you. We went through the same thing, and I got an education on that, and it ain't easy.
Yes.
It sounds pretty easy when you throw out some technologies. It ain't that easy.
Yes.
It ain't that easy. Okay. I'm assuming you have a bunch of tech debt in terms of the code and how it's inefficient.
So-
In some cases, do you have to rewrite a lot of code?
Some cases, yeah. We used to run on C++. It was highly efficient at that point in time because it was a very highly performant system. Now, as more and more people move to Java, right, the interesting piece, and I'll talk about it when we talk about more AI stuff, we are able to take about 300 of those applications in less than six months. In the last six months, we have migrated 150 out into Java, complete AI rewrite.
AI rewrite.
Yes. No humans touching it, all the way from C++ to Java and putting it in production. That's been a boon for us.
Yeah.
We see that retired pretty soon.
Let's take a quick detour on that because that's important. I don't want to leave that line of thought. You take the C++ code, and you, I'm going to talk like a layman here, but you plug it into AI-
Yeah.
It comes out with Java code.
Java code.
Right?
Yeah.
Do humans look at it to verify it?
We do a review, right.
Yeah, yeah.
AI also actually does the validation testing. It's not even just code.
QA as well.
It's a complete SDLC.
Yeah.
We have test cases that we test our C++ code. We feed it to AI.
It converts it into Java. We run it in the functional test.
Yeah.
If the functional test fails, it goes back to the review cycle where the LLM learns and does it. It's pretty autonomous. It was a neat thing that our team did. It took two months for them to build that skills on the engine.
Interesting.
It's just like a factory.
It's years of condensed work-
Yes.
Into months.
Yes.
Yeah. That's important. Okay, let's switch to external challenges and focus on the merchants. I think for those of you who don't know, Srini was at a big merchant in Arkansas-
Yeah.
Called Walmart for a while. I want to get your view from the merchant side, and that's another reason why I think you're great for this role, because you know what it's like and how hard it is for merchants historically with PayPal. Talk about what you're doing on the merchant side to make it easier to integrate with PayPal.
Yep. Our story, I used to be at Starbucks when eBay and PayPal were part of-
Yeah.
The same company.
Yeah.
I was the first, I think, merchant to implement PayPal as a third-party merchant, right? I've done the integration then, and I did this with Walmart. I think the reason I say that is PayPal has had three or four versions of our APIs.
Yeah.
That we have created over the time. We have been kind of benevolent in that we have never deprecated those APIs, which kind of is good in some ways, but it's bad in some ways because you're really having tech debt from a merchant perspective. You're having merchants on multiple integrations.
Yeah.
I think that was the biggest challenge that we faced. When we were trying to now get into this new checkout and new modernization, as we talked about, we learned that, and it was very tough to get on the roadmaps of every merchant t o go say, "Hey, you need to upgrade right now."
Yeah.
Right?
Yeah.
They have significant roadmaps and deliverables that they need. I said let's pivot. How about irrespective of what the integration is, we give them the most modern experience? We spent a lot of time thinking about it, and we now made it so seamless that irrespective of what integration you are. Yo u will get the most modern checkout experience-
Yeah.
That we can give.
Yeah.
That alleviated a little bit pain from the merchant perspective allowed us to move faster and give benefits to the merchant.
How did you do that? Was it in an embedded strategy in a sense, where you're saying, "Here's one API to link to our system."
No, they were still using the old APIs.
They're still using the old APIs.
We were intercepting in the back end. When it came to us, we took the pain on our side.
Yeah.
That's coming from Walmart customer first, you have to really look from a merchant first perspective.
Yeah.
Looking at it, we said, "How do we alleviate the pain?" They will make the same API calls the way they make it, but we will intercept it in the back end.
Redirect it to the modern.
Redirect to the modern system.
Send it back through the existing messaging layer.
Existing messaging layer to get it done. That will give you the new pay sheet. It will not unlock new capabilities because you're still on old integration.
Yeah.
We have now decoupled it where you can now at least get the new pay sheet without having to worry about that.
The customer experience on the merchant side is still the same-
The same.
Because the APIs are the same.
The same.
Okay.
Right. Seamless-
Have you ever thought of an embedded strategy where it's a single API, you create a hosted webpage on their app or website?
Right.
All of the sausage making is on your side. They don't see anything except a single API integration.
That's the future, right? Even if I had to do that, I have to get them to change it.
You still have to get them to change. Yep.
First is you don't have to change it, we'll make it happen.
Yeah.
The second thing that we are now doing is, we are using AI, we call it Merchant AI Integration Agent. What we have done is, we have basically created an agent similar to Claude MCP agent, which basically, the merchant can download to their site, and they can connect to their LLM of choice. Right? We can connect to our LLM factory. What it does is, it goes through the code, it actually changes the code, fixes it, u pgrades it to the newer integration, validates it, and makes sure that it works completely. Certifies it.
Wow. Okay.
The first few iterations, when we tried out, we tried out with merchants in Asia. It took two or three tries because it was reasoning itself out. We built what is called a memory layer. What happened was, every single time it saw something that it had to fix again-
Yeah.
It put it into the memory. What we are seeing now is, as we go through more and more merchants, it's doing it in the first shot-
Yeah.
Because it now knows enough about it. That alleviates us to move a lot of the long tail. I call it head, torso, and tail. Head, the top merchants, you have to work with them. They're not going to-
Correct.
Trust an automated agent.
Yeah.
The torso and the tail, we can now do this, and we are doing this to the SI, service integrators, to be able to go do the same. That, that's the second part, which will allow us to migrate everybody faster. The third part, which is what you referenced, Adam, is how do we build a future-proof integration where you embed something, and it will evolve itself rather than having to upgrade over a period of time.
Right.
We are now making it more future-proof. It will never be completely future-proof.
Right.
But as-
Anything you want to do, you change on your end.
On our end.
It's automatically updated to them. They don't have to touch it.
At all.
Yeah, that's what we did on our platform, too.
Yes.
Merchants really didn't understand it at first, and then they understood it, and then it was smoother sailing.
Smoother sailing.
It still takes a little time to disconnect the old and implement the new.
Yep.
Couple of agile cycles for sure, right? Couple of sprints.
That's why with this agent now, it automatically does that, right?
Yeah.
It'll take any version of your old integration and move it to the most modern one.
Yep.
The way we have created the agent is not only now it's integrating and changing your integration, it can also certify. The idea is to constantly monitor our merchants for their certification and the performance in the future.
Yeah.
We can now use the same agent to look at their integration to see-
Got it.
This is working very well. That has been our challenge because.
That goes halfway, like you said, right?
Yeah.
They get the latest from your side.
Yes.
It's still the UX that they have today for consumers.
Consumer.
It's not optimal, but it's getting some of the way there.
Getting some of the way there. If you really look at the payment interface, it's pretty much seamless-
Yeah.
Experience.
Yeah. Let's say, take me into the room where you're talking to a merchant.
Yeah.
I am a merchant that likes PayPal and wants to continue to use PayPal, and I want to be updated-
Yes.
On everything, right? How many sprints is it taking me to do?
Again, what I would say is use this agent. Right?
Irrespective of the merchant, I would say use the agent. It'll code assist. Nowadays, code assist and code development-
Yeah.
Getting there. Use the code assist. It'll go through. It is in your environment, so you don't have to worry about it. Right? What we've seen is when it does it by itself, it does it in less than two hours. Okay? It goes through the code, it knows the integration pattern, it does that seamlessly. Obviously, the merchant has their own functional testing, their production testing, and whatnot they need to do.
Right.
That's something that we don't have a control on.
Yeah.
We have done it on multiple code bases.
Yeah.
Right.
Yeah.
So-
Let me just make sure I fully understand you. I'm a merchant on an older version.
Older version. Yes.
You say use the agent assist.
Yep.
You can get me on the latest version.
In couple of hours.
in a couple of hours.
Yes.
Again, not changing my-
Yeah.
UX to the consumer.
Yes.
Okay. I want to change the UX as well.
That is a fairly involved complication because it depends on the merchant's style, because they have to change the checkout.
Right.
That's much more proprietary, their own stuff. It's not our stuff.
Right.
What we are doing is we are seamlessly changing this-
Yep.
Into this. We can provide more stuff with this integration, as in we can help you personalize.
Yeah.
Right? Where we can tell you, "Hey, this person has an affinity to PayPal if you want to present them better.
Yep.
You want to say smart messaging with buy now, pay later stuff.
Got it.
Those kind of things, that comes out of the box with the latest integration. They can choose to surface.
Okay.
They still have to do that code change.
Okay. Yeah. That's right.
To me, there is a clear line between the merchant property and our property.
Resources, and that's a bigger lift.
Yes.
Okay, what you're saying is we can get you to the updated version with the best identity and the best decisioning and all that kind of stuff in very quickly.
Very quickly.
Okay, cool. The UX would be-
Yep.
More in the future. Okay.
The UX of the merchant.
UX of the right.
The checkout will be our UX. As soon as you click Buy with PayPal, it'll be pretty much a single-click experience. It'll go to a pay sheet and then go back. That part is going to be very streamlined.
Important distinction. The consumer UX would be the most updated on what you're talking about-
Yes.
With the agent.
With the agent.
That's important. Okay.
Yes.
I misunderstood there.
There is the merchant checkout.
Yep.
That they have to make the changes.
Correct.
You click on Pay with PayPal or Buy with PayPal, that experience that we used to go through, which was four or five pages long, now it's a single page. Right?
Much easier.
One click, if we have already seen you.
Got it. Okay. That's huge. That's a huge change.
That's a huge change. We are seeing conversion benefits out of that. That's kind of the value proposition that I would tell the merchant when I go there.
Okay. That's a big change.
Yes.
Just leave it at that. Steve's nodding his head for those of you not in the room. Steve's very happy with that answer. Okay. We touched on AI for a second with the agent, we got to delve into this a little bit more, right?
Yes.
Talk about how you've leveraged it in the prior 12 months, how you see it evolving over the next 12 - 24 months, and then we can get into, maybe think about it from a cost reduction perspective, a product generation perspective, and how you think it can help you drive growth, right?
Yeah.
I think those are two or three sides we need to tackle.
Let me start with, I'm very proud of the PayPal technology team. We were one of the first teams to adopt MCP, and I'll start with that, right. MCP, as you know, is Model Context Protocol that basically allows.
I didn't know that.
It allows to connect to any tools. If you think about LLM as a brain, okay, it can reason, and it can do a lot of things. It needs tools to do it. Tools as in, "I need to connect and update this record. I need to do this API call.
That's what MCP protocol was used for. The reason we were the first to jump in, we were the first remote MCP server where we put our invoicing out to the public, so that you could go into Claude and say, "Hey, invoice this plumber for me for $30 for this," and it will know how to call the PayPal API and do the invoice and send it out. That's how we started on actually implementing MCP.
Okay.
What I said was, "This is so powerful." We set an enterprise standard. We are going to MCP everything internally, whether it's Salesforce, whether it's Workday, whether it's all our tools, there'll be an MCP server in front of it, so that the brain, the LLMs, can actually do the actions. That was our first foray. By doing that, people could do workflows that they could not do before. Right? That's how we started on the journey. I talked about the C++ migration. We are planning on running checkout across multiple countries. We wanted to run buy now, pay later into multiple countries. These are what I call compressible problems. These are rinse and repeat problems. There are some changes that you have to do, but it's predominantly rinse and repeat. We just said, "Let's take code assist and just run through it."
That's why we were able to go to 154 countries checkout pretty quickly. That is what I call code assist, where we-
Yeah.
Use the code assist technology to make it happen. We are getting to this layer where we can do Jira to code. Our product manager basically gives a Jira story, it automatically writes the code. We were able to do it for small tasks. Recently, what my team has done is, we have taken the payments and the checkout infrastructure, and we have created our knowledge layer. It is not just reading code. We have had architects put knowledge into it to really make it to understand the full flow. It took us, like, three weeks. With that knowledge layer, you can pretty much implement feature, triage a problem, ask any kind of questions, and it'll answer to you that a human being cannot do. That I see as the future.
When we go on the cloud modernization journey, I'm expecting the team to basically say, "You know this, convert it to Google Spanner. Move it to the Google interface, and we'll give you the cloud blueprint, and we'll be done." That's kind of our journey right now. We are at AI SDLC.
Okay.
Like our code assist PR ratio is growing 50% month-over-month. Right?
Code assist is growing 50% month-over-month.
Month. Right.
Okay.
So number of-
Can I ask you where it is on the spectrum from zero to 100?
I would say the number of PRs that we are doing right now, it'll be around 2,000 + PRs a week, AI assisted PRs. No human involved in it. Right. If you really look at it-
Getting there.
Getting there.
Okay.
Scaling, right?
Okay.
That's kind of how we are really thinking about this.
Okay. Okay. You got to the edge of my understanding of all that stuff.
Yes.
Let's pull it back a little bit into what is most important to investors, right? A big debate with investors is whether PayPal can re-accelerate branded growth-
Yeah.
At checkout. What are the most important technical levers behind that? We just talked about some of it. You got to get on the most recent API. You got to make sure you're on the best UX and all that kind of stuff. Talk to us about what's your plan to re-accelerate branded from a technical perspective.
Perspective. Let's start with this. It's all about consumer experience. It has to be simple, right? When it is simple, it makes it a lot cleaner. The first and the foremost is once you get into the funnel. Our friction rate, our authorization, login friction rate is at the lowest ever.
Okay.
What we have done with that is, with MFA passkeys. We are rolling out passkeys. We are getting millions and millions of passkeys generated. What it means is, for the customer, they don't have to really use a password. They don't have to input anything. They use their biometrics. It signs you in, you're automatically logged in. That was one of our biggest friction points. We have removed that friction point. We get there.
Okay.
We historically had a billing agreement product where you can wallet your payment with PayPal. When you do that's a zero click. You are not even going to PayPal. You just check out, it automatically is doing that.
Yeah.
We are now with the conversion improvements that we are doing in the flow of selecting the instrument and so forth, now billing agreements are going up, which then gets you wallet and moves faster.
Yeah.
That has been the one biggest win that we've gotten. The second thing that we are doing from a technical perspective is, remember like I told you, we are not waiting for the merchant integration. We are upgrading everybody. That was with the consumer mindset, because the consumer, irrespective of which merchant they are checking out on, they're going to see the same experience. Familiarity is actually good because it makes you check out faster. Those are two things. It is after the fact that you clicked on PayPal. Now let's go into technically how can we influence merchants to adopt PayPal better. We call it presentment. We want PayPal to be the choice that is shown.
We have something called Payment Ready APIs, where we say, "Hey, merchant, this person," because we know from the device and the sign-in from past merchants, is a PayPal user, has a propensity to use PayPal. What that helps the merchant is when you present PayPal as an option, that conversion rate is much higher than-
Right.
Because now they know-
Safe credentials are there.
Safe credentials are there. This payment is something that will flow through seamlessly instead of a credit card, which might decline, like a lot of percent.
Yeah.
This is what I call presentment taken to the next level with technology. Last but not the least is we have inverted the payment experience to be, you don't check out and you pay. We call it one-click storefront ads that we launched with Meta. In this scenario, a merchant has created an advertisement. It says buy with PayPal. You click on it, you just pay, and the order is dropped to the merchant. Right? In that scenario, you're taking away the presentment. You're taking away the conversion.
Yeah.
No choices.
Yeah.
The merchant sees absolute high conversion. Those are the four ways.
Yeah.
From a technology perspective, we are empowering the merchants to have better conversion, better customer reach, and being able to deliver on their demand generation.
At what point do you think merchants collectively will say, PayPal was a pain in the ass in the past to use. Conversion rates were low, and now PayPal is actually really good. When do you think we see that narrative emerging in aggregate? You're always going to have merchants that say you're terrible-
Yeah.
They're going to say that about anybody.
Yes.
In general, when do we see that narrative emerge collectively?
I would slightly rather than the when, I'll tell you a condition which creates that scenario. Right now, the merchants are facing so much fragmentation on the demand generation.
Yeah.
They have social search, which has historically been there. They are seeing social. They're seeing agentic.
Yeah.
What is happening is in all of the scenarios, they have to revamp their system to be able to check out and pay. What we are hoping with PayPal, similar to what we did 25 years ago, is one connection to many. With this checkout, I'm able to present you in any of these surfaces, and we are taking the friction out. That to me is the higher value, and we have agentic surfaces covered now. We have social surfaces covered now, and we can improve their own website experience. I think that combined, what I call is compounding benefits.
Yeah.
When they see that, and that's where when some merchants started seeing that, they're now moving more aggressively towards PayPal.
They start promoting you, moving you up the fold.
Yes.
Higher commission.
It becomes a flywheel now because-
Right.
C onsumer now wants PayPal, and we are now going back to the same flywheel strategy.
It sounds like you're laser focused on conversion rates.
On demand.
Generating demand.
Generating demand as well.
From your user base.
From your user base.
Yeah.
Also making it seamless for the merchants to be on any surface, whether it's LLM or social. Now if you're integrated with our PayPal checkout, you could go and put an ad on Meta, and you can have a single click purchase. You don't even have to check out on the site.
Okay, great. Let's switch gears a little bit. You've had a broad array of assets. There's a big debate on whether they're really linked, and it's hard to separate them, and some people say, "Yeah, they share services, but it's really not hard." If you were to sell one piece or whatever, I won't mention the P, it doesn't matter, but if you were to sell one component of the overall, it could still survive on its own. I've heard both sides. I've heard it's really hard to separate, and I've heard it's really easy to separate, and you just have some kind of shared services agreement, and you're fine. How do you feel the businesses are connected?
So-
From a technical perspective.
From a technical perspective. That's why I went back to my original statement. Standardized, loosely coupled, highly aligned. There are a lot of capabilities.
The way I see technology strategy is not to think about, okay, How do we get the best value overall while decoupling the system so that they can operate independently? What we have done is we have been very laser-focused on, there are six capabilities that are fundamental to everything that we do. Identity, payments, risk, servicing, credit, and BNPL. When you have the six systems, irrespective of what is the merchant or the customer offering, you have to build the best in class. We are building that. We are standardizing so that all properties leverage the same platform underneath. They are decoupled. They are not tightly dependent on each other. They're abstracted out. That's the best way to really build for future while trying to keep the independence of it, because I want each team to move faster.
That doesn't mean they have to do the same thing multiple times. That's why from day one, the mantra has been loosely decoupled, highly aligned.
Loosely decoupled, I think, is the term-
Yes.
To take forward, right? This is my interpretation of what you're saying. You let me know if you think it's right. It sounds like you're trying to solve for optionality and efficiency at the same time.
Yes.
Build the capabilities where it's more efficient, where the different components can leverage things that they need, build it once for all. If there is optionality in the future and you need to separate, they can survive. You can separate it out. It would require connectivity and multi-year service agreements and stuff like that to draw on the services, but it can be done.
It can be done.
Is that the right way to think about it?
I would say not only optionality, it's also the speed of innovation.
Okay.
It's also economics. When you see all the payments going through the same layer, you are learning from each other. Like if I see an instrument in Braintree per se, when I'm processing it with the same payment system, then I see that on the PayPal side, I have a better understanding of it.
Yeah.
I would not just call it's just optionality. It's a better way of doing business. Better economics, better speed of innovation-
Yeah.
While preserving the optionality.
Makes a lot of sense, and I think that's pretty consistent with what Enrique has said at different points. Okay. Let's talk about Venmo.
Yep.
Just looking at the time here. We got to boogie. We're not at the speed round-
Yeah.
Phase yet, but we're getting there. Venmo has incredible consumer engagement. Monetization has taken a little bit longer maybe than some were hoping for. From a product and technology standpoint, what needs to happen for Venmo to become a more meaningful commerce and financial services engine?
We talked about identity. I will not repeat it, but what I wanted to say is that basically gave the oxygen for Venmo last year to do the user-facing innovation stuff. They launched Venmo Stash loyalty platform. They launched Venmo debit cards and credit cards and so forth. If they were focused on blocking and tackling the identity, they would not have moved fast. That was the first unlock that we got out of the identity win. We're now converging payments. As soon as we converge payments, now everything that we did with PayPal checkout, we are going to take the same checkout subsystem and now make Venmo provide that functionality. You might say, what does that get you?
Talk about what do you mean by being able to pay with Venmo anywhere where PayPal is accepted?
Yes.
Okay.
There are two pieces.
Venmo debit cards or whatever.
No, there are two pieces.
Okay.
Pay with Venmo is a product by itself.
Yep.
Right now it is using stored value and credit cards.
Yep.
They don't have buy now, pay later offering. When the payment systems are converged this year, what happens is now Venmo will be able to offer buy now, pay later instantly. That is the demographic that really is very attracted to BNPL. The fact that we can light up the BNPL pretty quickly now becomes a meaningful point. The other point is Venmo debit card penetration still is to go. It's about 8% of our total Venmo, and that came from our common financial services. Now we are able to issue a debit card like we do for a PayPal debit card.
Right.
That's where, as they leverage the same underlying stuff, they can now do credit, they can do buy now, pay later.
Okay.
They can do the pay with Venmo can move faster.
Common functionality.
Common functionality.
PayPal and Venmo.
Venmo.
Okay.
The third thing that we did, which is we launched, we call PayPal World. We had made PayPal Venmo interoperable. You could actually send money from Venmo to PayPal and PayPal to Venmo seamlessly. You just have to put a phone number and we can look it up. By doing that, we basically now made Venmo to be able to send money to anybody in PayPal internationally. That has been a huge offering where people are now leveraging that very much. Why I'm bringing this interoperability is, with this interoperability, when we get these payments and the pay sheet integration done, with the interoperability, any merchant who's already offering PayPal, we can actually do pay with Venmo seamlessly. When you click on the PayPal button, any wallet that is PayPal World Wallet will automatically show. It could be UPI, it could be WeChat, it could be Venmo.
Now what we are doing is we are basically plugging the Venmo into the PayPal flywheel. Any merchant, you don't have to integrate separately for Venmo.
When that was first presented, I was like, "Wow, Alex, that's a really interesting idea." If I'm a consumer in a foreign country that doesn't know PayPal.
Right.
All of a sudden I'm like, "Check out with PayPal," my first reaction is, "I don't have PayPal. I'm not going to use that.
Yes.
Is it more going to be whatever the local scheme is powered by PayPal?
There are two pieces to it.
Yeah.
The first piece is the local country will promote it. That's one piece. They see PayPal, you will be accepted.
Yeah.
That'll be number one. Number two, remember that Payment Ready API that I said?
When the merchant starts using the Payment Ready APIs, right, with the new integration, now even the PayPal button can be rendered in the local-
Got it.
Because we already know this person has a UPI account or a WeChat account. We are trying to be backward compatible while we are trying to. That's where you might have seen it as you clicked on PayPal before I see the wallet, but with Agent Ready, we can actually move it one step ahead in the game.
Okay.
Right. It's a challenge for a lot of merchants because they do not know where people are coming from. They usually have a roster of all the payment methods. You've seen that, like APMs.
Yeah.
Multiple APMs.
Yeah.
That is usually very detrimental to the conversion. If somebody can tell you the propensity to buy on this payment method is the best, it actually will help the merchant-
Yeah
Convert.
I agree. Okay, let's hit Braintree for a quick sec.
Yeah.
I got a summary question for you. Braintree is strategically important for some. Some people think it is not. Difference of opinion, fair. How do you think of Braintree's role in the technology stack and the opportunity to leverage Braintree, which is a merchant solution, with the PayPal and Venmo consumer solutions?
For me, first it's the foot in the door, right? If you have a payment service, everybody needs a payment service partner.
Braintree is a foot in the door for a merchant.
Foot in the door for merchant, right. Whether you're doing branded processing or unbranded processing or any APMs that you want, I want merchant to adopt Braintree. By doing that, number one, we have an integration in which we can now upsell branded PayPal, Venmo, and so forth, with a single click of button to enable those payment methods in the merchant side. That's number one. Number two, with the volume of transactions we do, payment is all about arbitrage . Payment is all about how well we do economy of scale, right. Whether it's routing, whether it is knowing what is the low-cost provider to go to, knowing everything about the backend interchange rates, right. Those knowledge that we deliver with more and more volume, it helps us on the economics. It helps us on the economics. It helps us on the risk, it helps us on the fraud-
Yeah.
It helps in the economics, right? That's why that tech is very important, because it gives us a holistic view of the consumer.
Yeah.
I can go on about the data play, which is even more valuable.
Yeah. Okay. In the last few minutes we have, I wanted to ask you, the investment community is so focused on growth rates and margins and that kind of stuff. Some people who have a technical background totally followed what you said.
Yep.
Fewer would probably say that was a very basic conversation.
Yes.
Some will say, "It was over my head." From your perspective, I will be able to say this conversation and what you've set out as your vision, it's showing up in the numbers. How will we, as an investment community, know that what you're doing is impacting results? Where will we see it?
I think you will see it when the merchant I talked about, the multiple surfaces on which they want to be treated. You would see when the merchant now says, "Hey, my catalog is available for demand generation on agentic surfaces, on social surfaces.
As it relates to PayPal.
As it relates to PayPal or Venmo, either way.
Yeah.
Right? It's a buy with Venmo or buy with PayPal, and it's a single click checkout. That's when you know that we basically are helping the merchant drive demand, which is what matters most for them.
Yeah. We'll see it in revenue, we'll see it-
Yes.
In margins. I'm assuming maybe at that point when things are at an advanced stage, maybe Steve and his crew are going to offer some different KPIs about showing where the progress is. Steve is nodding his head for those of you online.
Okay. Last thing I want to ask about is the company saying there's $1.5 billion of cost savings, some of that will be reallocated. Not asking you to quantify how much is going to be reallocated. That's Steve and the management team's job. The way you see it, the efficiencies on the cost saves, where do you want to reinvest what you're Do you see the IT budget or what you supervise, the spend actually going up and realization of much, much more efficiencies from that spend? Or do you see it as, no, we are a driver of cost reduction and efficiencies across the board while still facilitating growth?
I would answer it in two parts. Right? We want to be the best architecture. I'm not wanting to be evolving architecture. I want to have the best platform-
Yeah.
Out there three years from now.
Yeah.
That's the goal. The idea is if we modernize and if we cut down the tech debt, we should have significant savings that I want to reinvest in actually delivering the best platform out there. Right? We do not know where the AI will take it, but what I would say is we would reinvest to be the best-in-class technology platform out there. That's something that I would, as CTO, would push for. How do we be the leading platform player there? I do not want to sacrifice on our trades. I do not want to sacrifice on risk fraud. I want us to be the best identity provider out there. I want us to be the best checkout instrument out there.
Yeah.
I think with the amount of automation, cloud, and that data and all that kind of stuff, I think we can reinvest and we can be more efficient, is how I see it. It'll be a two to three-year cycle over there.
I hear that.
I think there is definitely efficiencies there.
Yeah. I always used to press my CIO, "This has got to go faster." His response, I knew what he was going to say every time. He's like, "You can't put nine women in a room and have a baby in a month. Things take time to build." Which was his version of saying, "We're moving as fast as we can, but shut up. We're doing our job." You're getting pressure, I'm sure, to go faster and faster and faster. What's the vibe inside like? Look, you've got a big job to clean up and build and do everything all at once while you're running a multinational platform that's processing hundreds of millions of transactions all the time. How do you balance speed versus doing it right?
I have a terminology which I call Yes, and. We have to balance. The thing is, I would've said the same thing like your CIO said, you can't do that. Now with software factories and agents, it's becoming a little bit more of a reality that we can do more things parallel. I think what you're going to see is significant velocity improvements in the coding innovation piece of stuff. Where I would be very cautious and will be thoughtful is in the migration piece.
Yeah.
As we move from this Oracle to the cloud, it's going to take a year, two years to really migrate. Okay?
I understand.
We can't rush that. That is an important part. We are now balancing the art of the possible, which is how I push my team. There are things we do not rush. We plan it, and we execute it systematically. There are other things we should just be innovating faster. If it's a user innovation, if it's a front-end innovation. In Venmo, for example, the user innovation, 50% of it is auto-coded by AI right now.
Yeah.
How can we innovate faster on the user experience is how we are pushing right now.
This is the last question because we're down to five seconds, what is the leverage ratio for AI agents versus human programmers? Let's say a human programmer costs $200,000. If you allocated that same $200,000 to agents using the best tokens or whatever, what's the ratio there? For $200,000 in tokens, you get 10 programmers? You get 20?
I would say it's slightly differently. It depends on the work that you're doing.
Yeah.
If you're wipe coding, it's not maybe the most efficient form. If you're lifting and shifting complex applications, it's worth its pound, like maybe 10 times more, 20 times more than what it is. I think what is happening is people are using it across a diverse nature of it, and you're seeing people token max out right now.
Yeah.
Without seeing value. What we have been trying to, or at least I'm trying to push, is being a judicious use of the tokens. We are focusing on the big lift and shift, which is why I'm doing AI-DLC, where, A, if we can fully be autonomous, that's worthwhile spending the tokens on.
Yeah.
If we can understand the knowledge layer and all that kind of stuff. Everything else, it's just a speed to the market right now-
Got it.
Because of the cost of the tokens. Somewhere, when the economics goes down, or we start putting AI machines at the desktop of our developer, maybe we don't have to pay the tokens now. It's all free. It's all your open source LLMs, then it's CapEx. It's an evolving story, Adam. I would say right now it's a hybrid. For modernization or major platform rewrite, you can find a better solve. It's not about cost. It's about efficiency, accuracy, speed, and consistency.
Yeah. That's great. Okay. We are a minute over, thank you very much. This was a great conversation. Again, I think it sets the stage for some more narrative coming out of you. Steve, all my questions coming up on earnings calls are going to be about Srini.
Good. Love it.
Thank you.
Thanks, Srini. Be well.
Nice to meet you.