PayPal on the Digital Wallet: We Basically Created This Category
NEW YORK (MainStreet)If you want to know what the mobile wallet is, there's a simple answer: PayPal. The company may have erroneously credited a man with $92 quadrillion this week, but by and large-- long before Square and Dwolla--PayPal was defining the digital payments sector.
In all seriousness, save yourself the time googling and checking infographics. In any industry where you can beat Google in usage by 40% and most people aren't even aware your competition existsyeah, I'd call that ownership. But don't take a journalist's word for it.
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So to better understand what the digital wallet was and how the company became such a beast (with 123 million users), I went directly to the source.
Here's PayPal's VP of Global Product Hill Ferguson, in a recent talk with MainStreet:
"PayPal, you know, we basically created this category, and have achieved a scale, global-based, that no other company has been able to do. We've done that because we've provided a very secure way for consumers to get what they want, and solve real problems for them. We do that in 193 countries."
A Quick Step Back
For those that don't yet know, a digital wallet is meant to be exactly what it sounds like: a digital version of what looks like a dead gerbil in your rear pocket. Information like debit cards are stored on your cloud account to be accessed whenever you need them. This essentially makes tasks such as checking out at your local grocery store something akin to checking out at Amazon. The tech isn't really that new...for PayPal.
"Back in 1998, no one called it a digital wallet," Ferguson said. "Essentially PayPal was trying to solve a problem that consumers had. They had you securely exchange money with people that you don't know. And, so, filling out a web page service to do that, with email as the primary communicator, eventually laid the ground work for what it's become."
Unfortunately for other providers, consumers have yet to really buy into the idea that their leather wallets (and clutches) need an upgrade. According to a recent report from comScore, digital wallets are generally not being used (only 12% outside of PayPal), mainly, because consumers are not aware of the benefits. Consumers feel this doesn't solve a major pain point.
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Ferguson, though, thinks there are benefits to going cashless.
"It's safer...especially if you look across the world, there are many parts of the country and in the world where carrying cash is just an unsafe thing to do," he said. It's also a convenience for purchasing in all formsonline, in-store or mobile.
The idea is that you would never have to carry that pesky wallet, card or cash.
The Data Downside of Digital Wallets?
Even in an epoch where when over 1 billion voluntarily trade personal information, whereabouts, and pictures over social media, many consumers wonder if their sensitive data is safe off in the cloud. Few, like me, fear the emergence of Skynet, while most fear arguably worse things...like spam.
"There's a lot of talk about big data, and a lot of companies talk about how much data they have," Ferguson said. "For us, we do have that, but our intent is to really use it just to improve the customer experience, and help consumers solve real world problems."
Now, as magical as a digital wallet in the cloud sounds, it's a tough business arena. Complacency in the market, for any business, even one as big as PayPal, equals death. So though it appears to enjoy the top spot, the company says it isn't content.
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"There are other companies: Google, it's up there, working on trying to build a wallet," Ferguson said. "There's some startup companies out there that are trying some things. There is a lot of innovation out there...So, we're not resting on our laurels or not at all declaring victory."
Adding to its plan for world domination, the company and its parent, Ebay Inc., have recently added some mobile app businesses under its banner, most notably mobile payment providers Zong and card.io, and mobile app development studio Duff Research. With so many chefs in the kitchen, one can imagine PayPal is cooking up something big.
What Can We Expect From PayPal In The Future, Say 2020?
The true distinguishing factor of a digital wallet may be its all-inclusive capabilities.
"Your identity will be established through a number of ways that you probably don't even know about today," Ferguson said. "The mobile thing is a very popular device today, but the smartphone didn't even exist 5 years ago...imagine having a digital wallet with your driver's license and your insurance and your credit card, all securely stored, and literally walk into a rental car agency, and you look into the scanner or you place your hand on a hand scanner to establish your identity, and from there, your digital wallet can be accessed to gather your credentials, and pick up some keys for the lock in the car."
Robot revolution postponed.
Of course, there's always PayPal Galactic.
--Jean-Marc Saint Laurent is a journalist for The Street. He is also a freelance money and business writer based in the Orlando area, having penned for the likes of The Motley Fool and the Center For Imagination. Connect with him at http://jsaintlaurent.com or follow him @JeanMarcSaint.