PayPal's 2021 Plans: Crypto, Honey & Digital Wallet Updates

PayPal revealed its future strategy this week for its digital wallet platform and its PayPal and Venmo applications. During its quarterly earnings discussion on Monday, the company announced plans to introduce significant modifications to its mobile applications over the coming year, incorporating a variety of new capabilities, including improved direct deposit, check cashing services, budgeting features, bill payment options, cryptocurrency support, subscription oversight, buy now/pay later options, and the complete suite of shopping resources from Honey.

Although PayPal previously mentioned integrating Honey’s features, CEO Dan Schulman provided specifics regarding the integrations planned for the deal-finding platform it acquired last year for $4 billion, along with a schedule for these and other planned app updates.

The acquisition of Honey brought 17 million monthly active users to PayPal. These users utilized Honey’s browser extension and mobile application to locate the best deals on desired items, monitor price fluctuations, and more.

Currently, the Honey experience operates independently from PayPal. The company intends to alter this situation in the next year.

Schulman stated that the company’s applications will be updated to include Honey’s shopping tools, such as its Wish List function for tracking desired items, price monitoring features that notify users of savings and price reductions, along with its deals, coupons, and rewards programs. These tools will be integrated directly into PayPal’s checkout process.

This will enable the company to follow the customer from the initial phase of searching for deals and expressing interest in a product, provide relevant savings and offers, and then seamlessly guide them through the checkout process within a single environment.

PayPal will also supply merchants with “anonymous demand data” based on consumer interaction with Honey’s tools, assisting them in boosting sales, according to the company.

Furthermore, PayPal provided a timeline for the Honey integrations and the other updates it intends to implement over the next year.

Bill Pay will begin its rollout this month, and a substantial redesign of the digital wallet experience is anticipated during the first half of 2021. A significant portion of the new functionality will be launched in the second quarter and the latter half of the year, with the objective of completing the majority of the changes by the end of the following year.

This encompasses PayPal’s cryptocurrency plans, which were announced in late October. The company initially intends to support Bitcoin, Ethereum, Bitcoin Cash, and Litecoin, starting within the U.S.

During the earnings call, Schulman also outlined PayPal’s plans for expanding cryptocurrency access to more users and regions. He explained that the ability to buy, sell, and hold cryptocurrencies will first become available in the U.S., followed by a rollout to international markets and the Venmo app in the first half of next year. (Currently, PayPal is allowing U.S. users to register for a waitlist for the new cryptocurrency features within the app).

This development will permit PayPal users to make purchases using cryptocurrencies at the company’s 28 million merchants without requiring any additional integrations from the merchants. The company clarified that this is possible due to its approach to the settlement process, allowing users to instantly convert cryptocurrency into traditional currency at a fixed exchange rate during PayPal checkout.

“This solution will not require any additional integrations, expose users to volatility risk, or incur incremental transaction fees for either consumers or merchants, and will significantly enhance the usability of cryptocurrencies,” Schulman stated. “This represents only the initial phase of the opportunities we foresee as we collaborate with regulators to embrace new forms of digital currencies,” he added.

PayPal has also entered the “buy now, pay later” market with its new “Pay in 4” installment program, which allows consumers to divide purchases into four payments. This program initially launched in France before its late August release in the U.S. and has since expanded to the U.K. (as Pay in 3). This feature will also be further integrated into the company’s applications in the coming months.

Venmo — which the company anticipates will generate $900 million in revenue next year — will see an expansion of business profiles, along with the addition of cryptocurrency capabilities, more fundamental financial tools, and shopping features, as well as an overhaul of the “Pay with Venmo” checkout experience.

Schulman characterized the company’s plans to revamp its Venmo and PayPal apps as a “fundamental transformation,” due to the extensive new functionality they will incorporate as the changes are implemented over the next year, as well as the new user experience—essentially, a redesign—that will enable users to seamlessly transition between different experiences without needing to switch applications or use a desktop browser.

PayPal’s earnings did not generate enthusiasm among Wall Street investors this week, resulting in a stock decline due to the lack of 2021 guidance. However, the upcoming year appears promising for PayPal’s digital wallet applications.