12. The Rise of POS Financing
19%YoY spike.1
1. Business Insider Intelligence, The Point-of-Sale Financing Report, 9/16/19
28%
of shoppers now prefer
a retailer that offers an
instant financing option.2
2. Payments Journal, “Does the Answer to POS Consumer Financing Lie in Bank-Fintech Collaboration?”, Yaacov Martin, 2/15/19
14. Shop at Millions of PayPal Retailers
Millions of
millennials
use PayPal Credit to shop.*
Average order values of millennials
increase by 44%
with PayPal Credit.*
For Gen Z, that number is even
higher at 71.5%.*
* Based on PayPal’s analysis of internal data of all PayPal and PayPal Credit customers from
April 2018 to March 2019. Millennials defined as born between 1981 and 1997
15. Shop at Millions of PayPal Retailers
1
2
3
Apply at checkout.*
Approved
within seconds.
Shop with
PayPal merchants.
*Subject to Credit Approval
EXAMPLE
16. 90%of spend does not require
a new credit application.2
Billionsof dollarsin open-to-buyonly
availableon PayPal Credit.2
Retailers Who Added a PayPal Credit Button
Increased Sales by 15%1
1. Average incremental sales based on PayPal’s analysis of internal data among middle market merchants
with annual sales above $5MM against a similar control population between January 2013 and March 2018
2. Based on PayPal’s analysis of internal data of all PayPal and PayPal Credit active customers and volume
from December 2017 – November 2018
18. Increasing Loyalty
*PayPal Credit Insights Selling, Logica Research, December 2018.
of U.S. PPC users surveyed say
they are more likely to shop at a
retailer again if they offer Pay Pal
Credit.*
56%
of fashion transactions
happen on mobile devices.*
50%
25. “Obviously, it’s good for the bottom line
as a business owner but it’s also good
for the bottom line in my soul.”
~ Rose Morris, Founder, Abram’s Nation
27. • Access millennial and Gen Z spend
by offering POS financing.
• PayPal Credit helps grow AOV
(average order values) and sales.
• PayPal Credit drives increased loyalty.
Actionable Takeaways
from this Session:
Editor's Notes
Intro
Questions for the audience:
How many people are at NRF for the first time?
How many retailers in the crowd?
How many people who love this conference so much they are here on a Sunday? [or something else funny]
To quickly introduce myself, I’m Susan Schmidt, VP of U.S. Consumer Credit at PayPal.
I’ve worked in payments for almost my entire career. It’s an exciting, changing, diverse industry that keeps me intrigued.
I actually started out pursuing a totally different career in international relations, but found a role in payments that has allowed me to work on things I’m passionate about.
It was love at first sight. I really love payments – said nobody ever!
Today we’re here to talk about the next generation of shoppers and how to capture their loyalty through payments innovation.
I’ll also tell you a bit about PayPal as a values-driven organization and some of the amazing work we’re doing that makes me so proud to be a part of this company.
Most of you in this room are familiar with PayPal:
54% of people are more willing to make a purchase when they see the PayPal logo.
But you may not be familiar with our point of sale financing technology, PayPal Credit.
PayPal Credit is a digital line of credit retailers can offer to their shoppers at no additional cost to the retailer.
This enables their customers to buy what they want now, and pay over time using a revolving credit line.
We’re one of the longest-standing online financing options, working with millions of merchants.
[ANIMATION]
Consumers have spent more than $50B with PayPal Credit since 2008.
As an open-end, digital line of credit, shoppers who have already been approved for PayPal Credit don’t have to apply again.
These customers bring billions of dollars in “open to buy” to any merchant accepting PayPal: Millions of shoppers who are already approved for PayPal Credit, and want to use it at checkout.
We’re also able to provide retailers with an unparalleled level of expertise in the space.
We’re backed by PayPal’s two-sided network of nearly 300 million active accounts.
We have the data and insights that no other company can see, based on our depth and breadth of customers and merchants.
[ANIMATION]
Because of this, we’re able to build products based on these customer insights.
For example, as you’re seeing in the screenshot here, we saw a demand for consumers to use POS financing for lower ticket items and in equal, monthly payments.
This past holiday season we rolled out an installments-like product that allows consumers to pay for items in three equal, monthly payments, starting at as low as $30, with a 0% APR.
Now, even more retailers can take advantage of this payment model and bring PayPal Credit’s billions of dollars in open-to-buy to their business.
And this is in addition to our existing offer of No Interest on purchases $99 and up when paid in the first 6 months. It’s a powerful offer that retailers of all sizes are bringing to their customers.
Most of you in this room are familiar with PayPal:
54% of people are more willing to make a purchase when they see the PayPal logo.
But you may not be familiar with our point of sale financing technology, PayPal Credit.
PayPal Credit is a digital line of credit retailers can offer to their shoppers at no additional cost to the retailer.
This enables their customers to buy what they want now, and pay over time using a revolving credit line.
We’re one of the longest-standing online financing options, working with millions of merchants.
[ANIMATION]
Consumers have spent more than $50B with PayPal Credit since 2008.
As an open-end, digital line of credit, shoppers who have already been approved for PayPal Credit don’t have to apply again.
These customers bring billions of dollars in “open to buy” to any merchant accepting PayPal: Millions of shoppers who are already approved for PayPal Credit, and want to use it at checkout.
We’re also able to provide retailers with an unparalleled level of expertise in the space.
We’re backed by PayPal’s two-sided network of nearly 300 million active accounts.
We have the data and insights that no other company can see, based on our depth and breadth of customers and merchants.
[ANIMATION]
Because of this, we’re able to build products based on these customer insights.
For example, as you’re seeing in the screenshot here, we saw a demand for consumers to use POS financing for lower ticket items and in equal, monthly payments.
This past holiday season we rolled out an installments-like product that allows consumers to pay for items in three equal, monthly payments, starting at as low as $30, with a 0% APR.
Now, even more retailers can take advantage of this payment model and bring PayPal Credit’s billions of dollars in open-to-buy to their business.
And this is in addition to our existing offer of No Interest on purchases $99 and up when paid in the first 6 months. It’s a powerful offer that retailers of all sizes are bringing to their customers.
Some of you in this room might not think of payments as a loyalty-driver, but our data shows that it can be.
Who are the Millennial shoppers? And what do they really want?
www.accenture.com/us-en/insight-outlook-who-are-millennial-shoppers-what-do-they-really-want-retail
Most of you have likely heard of point of sale financing and online installments products.
It’s exploded in popularity in the past few years.
Grown nearly 20% year over year
And nearly a third of shoppers now prefer retailers that offer instant financing
[ANIMATION]
This is due in part to its popularity with millennials and Gen-Z shoppers.
As we all know, millennials are digital, and obsessed with their mobile devices.
We’re also learning that they look for flexible financing options.
And they care very much about living in the moment – Any millennials out there adding this slide to their Instagram story?
Anecdote or funny story from Susan about what she observes with her sons (millennials!)
This next generation of shoppers and their preferences are really the driving force behind the popularity of point of sale financing.
Millennials and Gen Z consumers have mixed feelings on credit cards:
1 in 3 millennials own a credit card.
These consumers see their purchases as part of their identity and a means of self-expression.
Point of sale or credit financing lets consumers live in the moment and do what they love without feeling burdened by upfront payments.
To quantify that for you, when looking at mass retail, average order values of millennials increase by 44% with PayPal Credit.
For Gen Z, that number is even higher at 71.5%.
Based on PayPal’s analysis on internal data of all PayPal and PayPal Credit customers from April 2018 to March 2019. Millennials defined as born between 1981 and 1997. Gen Z defined as born between 1998 and 2001.
What differentiates PayPal Credit amongst point-of-sale financing options out there is the open-end line of credit I mentioned before.
Consumers are approved for PayPal Credit within seconds,
make their purchase,
and can then take that line of credit to nearly every merchant accepting PayPal.
We are seeing incredible success amongst the retailers we partner with.
When U.S. middle-market businesses add the PayPal Credit button at checkout, we see an average 15% increase in incremental sales, starting within the first 3 months.
And 90% of that spend does not require a new application – it’s that open line of credit they are using at most retailers who accept PayPal.
PayPal Credit users are also bringing billions of dollars in “open to buy” to retailers, which they refer to as “shopping nirvana”.
Average incremental sales based on PayPal’s analysis of internal data among middle market merchants with annual sales above $5MM against a similar control population between January 2013 and March 2018.
Based on PayPal’s analysis of internal data of all PayPal and PayPal Credit active customers and volume from December 2017 – November 2018.
Some of you in this room might not think of payments as a loyalty-driver, but our data shows that it can be.
Our data shows that:
More than half of PayPal Credit users are more likely to shop at a retailer again if they offer PPC.
We also know you can generate loyalty by meeting customers where they already are shopping – for millennials and gen-z, that’s mobile.
I know a lot of retailers struggle with conversion on mobile. We see really strong engagement with mobile on PayPal Credit.
Half of our fashion transactions happen on mobile devices
There can be a mental block for consumers considering buying something on their phones – they question if they’re in the right setting and mindset to make an investment.
With monthly installments, credit financing can mitigate that mental barrier.
Customers don’t feel such a burden upfront.
There is also that “clunky-ness” if mobile browsing or the app isn’t done right.
Getting out your wallet and typing in your payment info feels tedious and is difficult on the go.
As a digital wallet, we have built-in automation that creates a frictionless experience and helps drive conversion.
I mentioned the new Easy Payments solution earlier, and I think this is another example of how retailers can incorporate new products based on consumer demand and inspire loyalty.
Consumers wanted to be able to pay over time for all kinds of purchases, and this new feature makes it easier to do that.
This also means that even more retailers can take advantage of credit financing options.
So that’s PayPal Credit! I now want to get back to PayPal as a company.
Because all of the products we’re talking about are rooted in our mission, vision, and values.
[ANIMATION]
All of our products at PayPal support our mission to democratize financial services.
Doing well by doing what’s right, as a business
And support small businesses with the tools and services they need to succeed
When I said I love payments earlier, this is what I meant. We’re working to make digital payments more accessible to more people, globally.
I could talk about this for hours, but I’ll give you just a few examples of how we bring our mission to life.
During last year’s government shutdown, we extended interest-free lines of credit to furloughed government workers.
We’ve implemented financial wellness programs for our employees and are ensuring global pay equity for women and minorities.
We are able to quickly set up disaster relief campaigns for people to make donations directly to relief efforts without fees. For example, the wildfires in California this past fall.
Going back to the theme of today’s session, we know that today’s consumers want to align themselves with companies who match their values.
We’ve been values-driven since the start, and that’s helped propel our success.
I’d like to share with you a video that truly demonstrates all of those ideas, specifically as it relates to Abram’s Nation.
Play Video
“It’s good for the bottom line as a business owner but it’s also good for the bottom line in my soul.”
What an amazing notion. I’m truly proud to be working on a product that not only brings value to retailers in this way, but is also making a difference.