PayPal operates in more than 200 markets, manages more than 148 million accounts, and facilitates a variety of financial transactions in 26 currencies. In this McKinsey interview PayPal’s vice president and general manager for Continental Europe, the Middle East, and Africa, Laurent Le Moal, presents a fascinating picture of the digital payments economy around the world
“In the past, when people just looked at payments, they were looking only at how the process could be made faster—for instance, all the debate around near-field communication. That’s not the problem anymore. Now the challenge is adaptability. How can we work with any form factor that makes sense for the merchants and their customers? What it means for us is not being prescriptive when it comes to the technology or requiring form factors to use PayPal. If it makes sense to integrate with a vendor’s point of sale, we will do that—using what already exists and not asking the merchants to completely change their hardware. If it makes sense for the consumer to use his phone to type in a code, we can also do that—as opposed to using a card to make a transaction. This also means going into the hardware business. PayPal has a device that attaches to a phone or a tablet to accept card payments—and this has been one of the ways to gain entry into these new services and control the entire end-to-end experience.”
“With the rise of digital goods, this approach no longer suffices. Such goods can generate ten times the number of transactions normally expected in traditional e-commerce, but the value is lower. Even if customers are much more engaged, they sometimes generate lower revenues. We still need to determine the marketing implications of this new interaction. And this is just one example of growing diversity. Entering new markets like Russia, Turkey, and Africa requires us to think more about customer segmentation in ways that are more nuanced than we have in the past. The devices these consumers use, the type of goods or services they consume—everything is different, including the way marketing targets them. E-mail marketing needs to evolve in a world where consumers expect high relevance and targeting but also widespread usage of social media. All this has completely changed the media mix—and we’ve brought new media into this mix by adding channels like Twitter and Facebook.”
Photo below shows some of the ways PayPal participates in the payment economy. Credit
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