Payments

Is PayPal the U.S. answer to Alipay?

  • PayPal is starting to look like Alipay, which has united merchants, consumers and small businesses with its data-based products
  • Beyond merchants and consumers, PayPal has also made bigger moves to reach the underbanked and small businesses, which will bring even more useful data
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Is PayPal the U.S. answer to Alipay?

The U.S. may not have an exact answer to Alibaba Group’s Alipay, China’s dominant third-party online payment platform, but PayPal is certainly starting to look like it.

Both provide online payment capabilities to merchants and consumers. Both are using data from their existing customers to offer consumer credit and small business loan options. Now, PayPal is catching up to Alipay in that it’s starting to get into consumer-to-business mobile payments and working to become more than the yellow button on your business’ website, as Amit Mathradas, general manager of small business at PayPal, puts it. It wants its products, partners and consumer and merchant clients to come together in a more comprehensive way.

“PayPal is growing with the merchant and taking a lot of direct input and feedback from our businesses,” Mathradas said. “We’re working hand in hand to help develop solutions so they can focus on running their business while we handle the fintech.”

So far this year, PayPal has announced that customers will soon be able to buy things at physical shops with their PayPal balances through Android Pay, that it will extend a pay-with-Venmo option to PayPal accepting merchants by the end of the year and closed a huge deal with TIO that will bring 10,000 billers into the PayPal network. Last week, it revealed its latest offering, PayPal Business in a Box, in partnership with e-commerce platform WooCommerce and accounting software company Xero.

That’s a lot of new data to be working with on top of what PayPal already has: 16 million merchant and 203 million consumer accounts. And with all these new agreements bringing even more customers into the network, PayPal can, like Alipay (now officially Ant Financial) use the customer data from those transactions to give consumers and merchants access to other financial services that look a lot like typical core banking products.

“The transaction volume you take part in using your PayPal account helps qualifying you towards our Working Capital product,” which offers small business loans backed by WebBank, Mathradas said.

PayPal Working Capital has provided $3 billion in loans and cash advances to 115,000 businesses since its 2013 launch.

Mathradas said while PayPal’s merchants had long considered it an important payments partner, they had been asking for things like access to cash and consumer credit to help drive increase in online store conversion. When merchants sign up for Business in a Box, they’re automatically registered for a PayPal business account that integrates into its WooCommerce store and Xero account with application programming interfaces.

There are 28 million small businesses in the U.S. that account for 54 percent of all of U.S. sales, according to the 2016 U.S. Small Business Profile by the SBA Office of Advocacy, and Xero has those in its sights.

“We’re going to change the game for small businesses because they make our economy go round and round, said Herman Man, Xero’s head of product for the Americas. “When it comes to their ability to monitor financial performance, real time is crucial to their survival.”

Mathradas declined to comment on PayPal’s threat to traditional banks.

“The one thing we do offer is an end to end solution. We can serve merchants or consumers that want be paid online, at a trade store, at a store, that need working capital, that need credit. One-stop shop is what separates us from anyone else out there. We’re going to continue using these assets to grow.”

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