PayPal Looks to Diversify Beyond Payments

EXCLUSIVE- PayPal wants to move beyond payments, according to its CFO John Rainey, who said the company will focus on a combination of partnerships and investments in companies that can propel the payments companies into other areas.

Rainey pointed to the PayPal’s recent partnership with investing platform Acorns as an example of this desired move at Credit Suisse 21st Annual Technology, Media & Telecom Conference in Scottsdale, Arizona yesterday.

The ultimate goal of the company, Rainey said is, “to be an everyday part of our customers’ lives and it’s hard to do that if you are only in payments.”

Perhaps, PayPal is dreaming of becoming the U.S. version of Alipay? While Rainey did not specifically say so, he did mention Chinese payments companies as being an aspirational model to the San Jose-based PayPal.

And indeed, PayPal has a large global scale, should it choose to pursue that path.

“We have a great competitive advantage,” he said. “…something that is unique is we have a two-sided network – 17 million merchants on one side and 200 million consumers on the other.”

As for partnerships, aside from scalability, another advantage PayPal has, according to Rainey, is that it is an open digital system, which allows it to apply a buy v. build strategy.

He pointed to partnerships like Acorns, which lets users link their PayPal and Acorns accounts so that they can set up investment payments. Then there is its acquisition of international money remittance company Xoom. Since being spun-off from parent company e-Bay in 2015, PayPal has accumulated over 25 major partnerships, many of which are promoting its diversification beyond payments.

Diversification through M&A is also not off the table for the coming year.

And Indeed, PayPal is well equipped for such a strategy. As Rainey pointed out, when it was spun-off from e-Bay, PayPal came out with an “attractive balance sheet and no debt,” he said.

PayPal is keen on diversifying, but it is just as focused on growth in its core payments market. Shopping online via mobile devices is where PayPal sees tremendous opportunity for both innovation and growth in the payments space.

The company also has plans for its  payment app Venmo, whose social media appeal has a competitive advantage with the millennial group over other competitors in the space. Rainey did not disclose specifics about Venmo’s growth strategy.

“In today’s age, 50-70% of shopping experiences begin on mobile devices, but mobile devices have the lowest rate of conversion,” Rainey said, “And if that doesn’t scream opportunity I don’t know what does.”