PayPal will launch a loans program to support small and medium-sized Brazilian businesses

May 24, 2020
Brazilian journalist based in New York
📷
voicetv.co.th
Dan Schulman, PayPal's President, Says The Pandemic Could Be The Missing Event To Boost Digital Payments. The increase in digital payments will make PayPal win 15 million to 20 million new customers during the pandemic.

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PayPal had the best month in its history in April. The company, which was born as a division of eBay and is one of the pioneers in digital payments, has seen its share price nearly double in the past 60 days. But the impact of the global coronavirus crisis is likely to be long-term, according to Dan Schulman, president of PayPal. He believes that the sudden change in behavior caused by the pandemic will accelerate the transition to digital payments over three to five years. Schulman is also one of the main voices that advocate more decisive action by companies for the good of employees. A week before the announcement of a credit program for small Brazilian businesses, Schulman talked to EXAME by videoconference from his home in California. Below are the main excerpts from the conversation.

How did the pandemic affect PayPal's business?

No one was prepared for a pandemic with that scale and speed. Our main goal has always been to take care of the employees' health. Everyone is working from home. Our productivity rates are better today than when we were in the office.

And I think it will force us to reimagine the work. We will not go back to the situation before. There was a tremendous acceleration from physical to digital, in all forms. I would say that we will take a leap of three to five years in electronic commerce, in digital payments. We have a huge scale: 325 million customers; more than 1 billion monthly transactions. April may have been our best month in history. Almost 7.5 million new consumers have joined our platform.

The number of daily active users has also increased by 20% to 40%. It is an amazing number. In this next quarter alone, we will add 15 million to 20 million new customers.

People are buying less and, with the global economic crisis, that is unlikely to change anytime soon. What is the impact of this for PayPal?

Retail is undergoing a fundamental change, thinking digital first, not physical.

The idea of ​​going to a store, choosing products, paying ... That will change. When was the last time you took cash? We have long predicted that the money will disappear, but it is very stubborn. To date, 85% of transactions are made in cash. The value proposition [of digital payments] is health. And obviously there are other factors. Digital payments are more efficient, take less time, cost less, allow better monitoring [of financial life]. In four or five years, we will have 6 billion smartphones in use worldwide. You will have all the power of a bank branch in the palm of your hand. Everything you did in the bank can now do online. I believe that the pieces are finally coming into place. We needed a combination of factors: distribution, which are smartphones, platforms, such as PayPal, and also an event, for a reason, which in a way is the current concern with hygiene and health. We hope that this pandemic will end soon. But we will not go back to the world we had before. We will find new ways of living, working and also shopping.

PayPal will announce the launch of the loan program for small Brazilian companies. How important is that?

We have a number of initiatives to support small and medium-sized businesses worldwide. In Brazil, 50% of jobs and 75% of e-commerce are the responsibility of small businesses. We are going to partner with [Brazilian fintech] Captalys. We are excited about the announcement. This program is very important and makes us very proud. In the United States, 70% of our loans are for businesses in regions where ten or more bank branches have closed. And where do banks close branches? In neighborhoods where the income level is below the national average, as they need a certain amount of deposits to guarantee the agency's profitability. Women-owned or minority-owned companies are also an important part of our loan program. Companies that receive this type of credit grow, on average, 22%. Those that do not receive a loan grow between 1% and 2%.

You are very firm about the importance of corporate social responsibility. Will the current crisis lead us to rethink the role of business in society?

Companies have a responsibility to do much more than maximize shareholder returns. A company's main responsibility is in relation to its staff. We must ensure that they are motivated and inspired, but also that they are financially healthy. All over the world there are too many people who are struggling to pay their bills. The pandemic only highlighted the seriousness of this situation. We did a study with all our employees. We found that almost 60% of those who received hourly wages, or those in initial positions, were struggling to pay their bills at the end of the month. And we were paying salaries compatible with the market average, or even higher. So, we increased salaries, cut 58% of the cost of benefits. We gave shares to all employees. All are partners in the company. This is the basics. If you do this, you will attract the best employees, who are the main competitive advantage for any company. We cannot escape that responsibility.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y de ellas son responsables sus autores. No reflejan ni comprometen el pensamiento u opinión de Latam Fintech Market, por lo cual no pueden ser interpretadas como recomendaciones emitidas por la platafomra. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista sobre el ecosistema Fintech.

PayPal had the best month in its history in April. The company, which was born as a division of eBay and is one of the pioneers in digital payments, has seen its share price nearly double in the past 60 days. But the impact of the global coronavirus crisis is likely to be long-term, according to Dan Schulman, president of PayPal. He believes that the sudden change in behavior caused by the pandemic will accelerate the transition to digital payments over three to five years. Schulman is also one of the main voices that advocate more decisive action by companies for the good of employees. A week before the announcement of a credit program for small Brazilian businesses, Schulman talked to EXAME by videoconference from his home in California. Below are the main excerpts from the conversation.

How did the pandemic affect PayPal's business?

No one was prepared for a pandemic with that scale and speed. Our main goal has always been to take care of the employees' health. Everyone is working from home. Our productivity rates are better today than when we were in the office.

And I think it will force us to reimagine the work. We will not go back to the situation before. There was a tremendous acceleration from physical to digital, in all forms. I would say that we will take a leap of three to five years in electronic commerce, in digital payments. We have a huge scale: 325 million customers; more than 1 billion monthly transactions. April may have been our best month in history. Almost 7.5 million new consumers have joined our platform.

The number of daily active users has also increased by 20% to 40%. It is an amazing number. In this next quarter alone, we will add 15 million to 20 million new customers.

People are buying less and, with the global economic crisis, that is unlikely to change anytime soon. What is the impact of this for PayPal?

Retail is undergoing a fundamental change, thinking digital first, not physical.

The idea of ​​going to a store, choosing products, paying ... That will change. When was the last time you took cash? We have long predicted that the money will disappear, but it is very stubborn. To date, 85% of transactions are made in cash. The value proposition [of digital payments] is health. And obviously there are other factors. Digital payments are more efficient, take less time, cost less, allow better monitoring [of financial life]. In four or five years, we will have 6 billion smartphones in use worldwide. You will have all the power of a bank branch in the palm of your hand. Everything you did in the bank can now do online. I believe that the pieces are finally coming into place. We needed a combination of factors: distribution, which are smartphones, platforms, such as PayPal, and also an event, for a reason, which in a way is the current concern with hygiene and health. We hope that this pandemic will end soon. But we will not go back to the world we had before. We will find new ways of living, working and also shopping.

PayPal will announce the launch of the loan program for small Brazilian companies. How important is that?

We have a number of initiatives to support small and medium-sized businesses worldwide. In Brazil, 50% of jobs and 75% of e-commerce are the responsibility of small businesses. We are going to partner with [Brazilian fintech] Captalys. We are excited about the announcement. This program is very important and makes us very proud. In the United States, 70% of our loans are for businesses in regions where ten or more bank branches have closed. And where do banks close branches? In neighborhoods where the income level is below the national average, as they need a certain amount of deposits to guarantee the agency's profitability. Women-owned or minority-owned companies are also an important part of our loan program. Companies that receive this type of credit grow, on average, 22%. Those that do not receive a loan grow between 1% and 2%.

You are very firm about the importance of corporate social responsibility. Will the current crisis lead us to rethink the role of business in society?

Companies have a responsibility to do much more than maximize shareholder returns. A company's main responsibility is in relation to its staff. We must ensure that they are motivated and inspired, but also that they are financially healthy. All over the world there are too many people who are struggling to pay their bills. The pandemic only highlighted the seriousness of this situation. We did a study with all our employees. We found that almost 60% of those who received hourly wages, or those in initial positions, were struggling to pay their bills at the end of the month. And we were paying salaries compatible with the market average, or even higher. So, we increased salaries, cut 58% of the cost of benefits. We gave shares to all employees. All are partners in the company. This is the basics. If you do this, you will attract the best employees, who are the main competitive advantage for any company. We cannot escape that responsibility.

Las opiniones compartidas y expresadas por los analistas son libres e independientes, y solamente sus autores son responsables de ellas. No reflejan ni comprometen el pensamiento o la opinión del equipo de Latam Fintech Hub y, por lo tanto, no pueden interpretarse como recomendaciones emitidas por la plataforma. Esta plataforma es un espacio abierto para promover la diversidad de puntos de vista en el ecosistema Fintech.

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