PayPal Super App: Launching with Messaging & More

PayPal’s Evolution into a Comprehensive Digital Wallet

The launch of PayPal’s ambitious “super app” initiative has received the green light for implementation. According to recent statements from PayPal CEO Dan Schulman during the second-quarter earnings call, the foundational version of the company’s redesigned consumer digital wallet application is now fully developed and preparations for a phased rollout are underway.

Phased Rollout and Feature Expansion

Over the coming months, PayPal anticipates a complete deployment across the United States. New payment solutions, financial instruments, commerce functionalities, and shopping tools are slated for introduction on a quarterly schedule.

The “Super App” Vision

For some time, PayPal has articulated its aspirations to create a “super app” – a strategic shift mirroring the functionality of platforms like China’s WeChat or Alipay, and India’s Paytm, within the U.S. market. The goal is to consolidate a wide array of consumer services under a single, unified platform, extending beyond traditional mobile payment processing.

Expanding Service Offerings

Previously announced features include enhanced direct deposit options, check cashing services, budgeting tools, bill payment capabilities, cryptocurrency support, subscription management, and buy now, pay later options. Furthermore, the integration of commerce tools, stemming from the $4 billion acquisition of Honey in 2019, is planned.

Currently, Honey operates as a separate application, website, and browser extension. However, the super app intends to incorporate its deal-finding and price-tracking functionalities.

New Features Revealed

During Wednesday’s earnings call, Schulman disclosed additional features for the super app, including high-yield savings accounts, early access to direct deposit funds, and integrated messaging capabilities beyond peer-to-peer transactions.

This messaging component, a recent addition to the plan, acknowledges the common practice of combining chat and payment requests. Users will be able to communicate directly within the app, facilitating requests and acknowledgments without leaving the platform.

Boosting User Engagement and Revenue

Schulman believes this feature will significantly increase platform engagement. “You don’t have to leave the platform to message back and forth,” he stated. Increased engagement is expected to translate into higher average revenue per active user.

Enhanced Cryptocurrency Capabilities

PayPal also hinted at “additional crypto capabilities,” though specifics were not provided. Earlier this month, the company raised the cryptocurrency purchase limit for eligible U.S. customers from $20,000 to $100,000, removing the annual purchase cap. Consumers can now also utilize their cryptocurrency holdings for purchases at millions of online retailers, with crypto being converted to U.S. dollars at the point of sale.

Iterative Development and UI Overhaul

While the app’s core code is complete, Schulman emphasized a commitment to continuous improvement. The initial release will not be the final version, but rather the foundation for ongoing updates and new features delivered quarterly.

Initial updates will focus on high-yield savings, improved bill pay functionality, expanded biller options, early access to direct deposit, budgeting tools, and the new two-way messaging feature.

To accommodate these additions, PayPal will undertake a substantial redesign of its user interface.

A Personalized User Experience

“Obviously, the [user experience] is being redesigned,” Schulman explained. “We’ve got rewards and shopping. We’ve got a whole giving hub around crowdsourcing, giving to charities. And then, obviously, buy now, pay later will be fully integrated into it. … The last time I counted, it was like 25 new capabilities that we’re going to put into the super app.”

The digital wallet will be personalized for each user, ensuring a unique experience. Artificial intelligence and machine learning will be leveraged to “enhance each customer’s experiences and opportunities,” according to Schulman.

Financial Performance and Account Growth

PayPal reported second-quarter revenue of $6.24 billion, slightly below Wall Street’s expectation of $6.27 billion. Earnings per share reached $1.15, exceeding the anticipated $1.12. Total payment volume from merchant customers increased by 40% to $311 billion, surpassing analysts’ projections of $295.2 billion. However, the company’s stock experienced a decline due to a revised Q3 outlook, influenced by eBay’s transition to its own managed payments system.

During the quarter, PayPal added 11.4 million net new active accounts, bringing the total to 403 million.