PayPal has been talking about its “super app” plans for some time after recently telling investors that its upcoming digital wallet and payment app had hit the market. Today the first version of this app is officially launched, offering a combination of financial instruments like direct deposit, bill payment, a digital wallet, peer-to-peer payments, shopping tools, crypto functions and more. The company also announces its partnership with Synchrony Bank for its new high-yield savings account, PayPal Savings.
These changes transform PayPal from a largely elaborate payment utility that gets pinned to other offerings here and there to a more complete finance app. While PayPal doesn’t want to be a “bank” itself, the new app has a number of competitive features for those considering shifting their finances to neobanks like Chime or Varo, as it now also offers support for direct paycheck deposits through PayPal. Pay the bill and more.
By enabling direct deposit, PayPal users can get paid up to two days earlier, which is one of the biggest advantages among those considering digital banking apps over traditional banks.
In addition to shifting their paychecks to Payal, customers’ PayPal funds can then be used for things that are part of everyday life, such as paying their bills, saving or shopping.
With the advanced billing feature, customers can track, view, and pay bills from thousands of businesses, including utilities, TV and Internet, insurance, credit cards, phone, and more, says PayPal. When the invoice payment first arrived earlier this year, it provided access to thousands (single-digit) of billers. Around 17,000 billers are now supported. Customers can also find billers using an improved, intelligent search function, set reminders for upcoming bills, and schedule automatic payments for bills they have to pay regularly. The invoices not only have to be paid from balances currently on the PayPal account, but can be paid through any suitable payment source that is already linked to your PayPal account.
Through a partnership with Synchrony Bank, PayPal Savings will offer a high-yield savings account with an annual percentage return (APY) of 0.40%, which is more than six times the national average of 0.06%, according to the company. However, this is less than top competitors in the digital banking market like Chime (0.50%), Varo (starts at 0.20% but users can qualify for 3.00% APY), Marcus (0, 50%), Ally (0.50%), ONE (1.00% or 3.00% for auto-save transactions) and others. However, the interest rate may appeal to those who are switching from a traditional bank, where the interest rates tend to be lower.
PayPal expects its high-yielding offering will be competitive not just on the APY, but on the strength of its combined offerings.
Credit: PayPal
“We know that about half of customers in the United States don’t even have a savings account, let alone one with a very competitive price,” notes Julian King, SVP of Consumer at PayPal. “All in all, we are of the opinion that the consolidation of all solutions on the platform represents a really competitive offer for the individual.”
The app has also been reorganized to take into account the new features and those that are yet to come.
It now has a personalized dashboard that provides an overview of the customer account. The Wallet tab allows users to manage direct deposits and connect funding sources such as bank accounts, debit and credit cards, and log into PayPal’s own debit, credit and cash cards. And a finance tab provides access to the high income savings and previously available crypto features that allow users to buy, hold, and sell Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
The Payments tab, meanwhile, will incorporate much of PayPal’s traditional functionality, including peer-to-peer payments, international transfers, charitable and nonprofit donations, and now bill payment and two-way messaging that users use to request payments or say thank you after receipt of payment – whether between friends and family or between dealers and customers. This addition could better align PayPal with PayPal-owned Venmo, which already offers the ability to add notes and comments to payments.
Messaging also ties in with PayPal’s new shopping hub, where the company is finally making good use of its Honey acquisition, valued at $ 4 billion in 2019. Honey’s core functionality is now becoming part of the PayPal mobile experience, including personalized offers and exclusive rewards.
Credit: PayPal
PayPal users can browse the discounts and offers in the app and then shop and transact through the in-app browser. The deals can be saved in the wallet for future use so that they can be used later when shopping in the app or online. Customers can also join a loyalty program where they can earn cashback and PayPal shopping credits for their purchases. The company says these personalized offerings will improve over time.
“We’re going to use AI and [machine learning] Skills to understand what types of shopping deals are most interesting to customers and develop them over time. You get smarter as you use the product, ”notes King. This also includes using the data on the offers that a customer likes and then offering them similar offers in the future.
Also new to the updated mobile app is PayPal’s crowdsourcing fundraising platform, the Generosity Network, which was first launched at the end of last year. The network is PayPal’s answer to GoFundMe or Facebook Fundraisers by offering tools that individuals can use to raise money for themselves, other people in need, or organizations like small businesses or charities. The network is now being expanded to include international markets, with Germany and Great Britain initially starting and other countries to follow.
As PayPal said, the new app lays the foundation for more new products in the coming quarters. The biggest initiative on their roadmap is the plan to get into the investment space to compete with other mobile investment apps like Robinhood. When that happens, it will support the ability to buy stocks, fractions of stocks, and ETFs, says PayPal.
It’ll also later add support for paying with QR codes like Venmo and tools for using PayPal to save in stores.
The updated app will roll out in the US starting today in a staggered version that will be completed in the coming weeks. PayPal Savings will not be available immediately, however – it will be arriving in the US in the “coming months,” as will some of the purchase and rewards tools.
