At this point last year, QR codes were mainly used as a tool for advertising and marketing campaigns. But its popularity has grown, mainly in restaurants, where they have begun to be used to consult the menu and order food.
And PayPal, known for online payments, has risen to that wave of popularity – bringing hopes to increase its relevance in the competitive market for physical payments.
“QR codes are not as strange to us now as they were before the pandemic,” he explains to Business Insider Paul Golding, Macquarie paid analyst.
These are just one piece of PayPal’s massive investment in technology. They have not stopped taking products– A deferred payment option and Venmo’s credit card, as well as adding cryptocurrencies to your app.
All of that has boosted PayPal’s record in 2020, which has seen the largest growth in payment volume and new accounts in its history. Also, its share price has more than doubled since the beginning of this year.
PayPal wants to transfer the ease of use of its online services to payment in physical establishments
PayPal added QR code payment to its app in May of this year. So, users only have to scan that code, either printed or on another screen, to make the purchase.
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Although payments have started to be made online out of a necessity this 2020, customers continue to buy in physical stores and are expected to return to them when everything is normal again. Until now, consumers have been embracing payments contactless via cards and wallets on smartphones, but using QR codes is relatively new to them.
With its proliferation in restaurants, PayPal believes that it is possible to start using them as a payment method.
“We have started to see payments contactless and things like that, and we will also begin to see QR codes as a form of payment for consumers, “he explains to Business Insider Guggenheim Securities Director and Analyst Jeffrey Cantwell.
PayPal’s QR code technology is built into the entire platform, including the Venmo app and the Honey rewards platform. The Venmo credit card, which launched in October, even has a printed QR code. All of this is part of the payment giant’s strategy to unite online and physical payments.
“When we think about accepting payments, we do it both online and in physical establishments,” he says in statements to Business Insider PayPal Global Sales Director Peggy Alford. “Even though COVID-19 has forced businesses to do everything online, we believe that at some point it will return to the physical store. We hope to help these stores digitize their in-store experiences as well.”
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PayPal, like most digital payment companies, want to shift cash: Any chance to change physical money to another digital form of payment is a win, whether with a card, a smartphone wallet or a QR code.
“Where PayPal is innovative is in the idea of converting payments from cash to digital,” explains Cantwell.
PayPal is deeply rooted in online payments, but it is not so popular in physicists. However, consumer aversion to touching money and keyboards this year has led the company to invest heavily in in-person contactless payment methods.
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“We took a big turn in the spring of this year to decide to invest in QR or, more generally, in contactless payments in the world offline“, he says in statements to Business Insider PayPal CFO John Rainey. “Customers don’t want to handle cash. They don’t want to touch a dataphone keyboard in the store.”
Venmo credit and debit cards are contactless And now, the company sees in QR codes a possibility to enter physical payments. The adoption of contactless operations seemed inevitable, at least with digital cards and wallets. QR codes have less force as a payment method, but Rainey hopes they will catch on in time.
“The question was always when it was going to happen. The answer is that it is happening now. It is our moment”, incites Rainey. “That doesn’t mean it’s going to happen in a month or a quarter or two,” Rainey explains. “I think it will take a few years. But we have invested a lot to help shape some of these trends.”
And while QR codes weren’t inevitable, the PayPal brand and its scale, as well as adoption in use, could see them skyrocket.
“It is very timely,” defends Cantwell.
PayPal QR codes are already in some 8,000 CVS pharmacies in the United States and are preparing similar deployments in the main retailers of the country, such as Bath & Beyond, Nike, Samsonite and Tumi. Likewise, are seeing how small businesses can adopt this technology, which allows them to accept a payment simply through customers’ smartphones.
“It’s almost like an opportunity to clean the slate,” defends Golding. “Even if it wasn’t what I would have thought about what a digital payments platform would do to find a way to expand into physical payments, it makes perfect sense.”
PayPal will compete with giants like Square in payments in stores
While PayPal is well known for its buy button, it has less power when paying in person.
“PayPal is far above its competitors in online payments“says Cantwell.” It is in physical payments where they are seeing the most competition, and where there are a number of highly regarded competitors. “
Square, for example, is a great player when it comes to in-person payments, especially among small businesses.
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“For SMEs, Square offers a compelling business package,” says Goldings.
Beyond payments, Square offers services like payroll processing and small business loans, and has proven to appeal to merchants.
But PayPal also offers more than just accepting payments: facilitates B2B operations so merchants and sellers can pay and receive payment, as well as a business credit card and working capital.
“All of these are huge focal points as we think about what is going to be a sustained digitization of commerce,” says Alford.
This article was originally published on BI Prime.
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