Money Man

As head of product marketing & business operations at PayPal’s newly-created Retail Services division, Patrick Gauthier is accountable for the definition and execution of PayPal’s strategy for traditional retailers. Prior to joining PayPal, Gauthier held executive positions with several of mCommerce, eCommerce and digital media startups, and also worked at Visa, where he managed the Emerging Products, Global Innovation, and Corporate Ventures and Strategic Alliance groups. During his time at Visa, he introduced a number of breakthrough products in payments (e.g. contactless) and loyalty (e.g. Target Smart Rewards), into the US marker, and redefined Visa’s global direction in mobile and eCommerce.

Right now though, his focus is obviously on PayPal, and mobile is an increasingly important part of this. “We have been doing mobile payments since 1996, and through an app since the App Store opened in 2008,” he points out.

But that term ‘mobile payments’ is a somewhat nebulous one, that means different things to different people. So what does it mean in PayPal’s world?

“You can use PayPal for mobile payment in three scenarios,” Gauthier explains. “The first is online. Now the traditional view of online is when someone is in their den, buying off the internet, but we are catering for other use cases, such as couch commerce, or when someone is in store and they can’t find their size in stock, so they pay for the item in store and have it delivered to their home.

“Then we have our PayPal Here solution, which has been live in the US, Singapore, Hong Kong, Japan, Canada and Australia since mid-March. This is a small reader device for iOS and Android phones that enables the owner to take a card payment via their mobile phone; it can also be used for cheques. This has blown our expectations, with 300,000 merchant sign-ups already.

“The third scenario is where we give the consumer, if they have a PayPal app, the ability to check in and pay without even taking their phone out of their pocket.  So you check in to the store and the app knows you are there, and then when it comes to settling the bill, the clerk sees the list of people checked in, so when you say you want to pay with PayPal, all you have to do is confirm the amount, and then the transaction happens. We have high hopes for this, because we think that traditional  cash register solutions are a bit long in the tooth.”

PayPal is also working with larger merchants and traditional POS (point of sale) vendors to incorporate the PayPal stack into their software, to enable these larger merchants to support payments with the PayPal wallet.

“We recently announced 15 retailers in the US who are signed up for this, including Home Depot, Jamba Juice, Foot Locker, JC Penney, Guitar Center, and Abercrombie & Fitch,” says Gauthier. “Our CEO has gone on record to say we will have agreements with 20 retailers by the end of 2012, and we are confident we will meet that guidance.”

PayPal also offers its Mobile Express Checkout solution. This, says Gauthier, is designed for use cases with some form of remote component to them, where the transaction is not happening in conjunction with a POS device or in a checkout lane. The most obvious example is someone buying something from a mobile website. Gauthier says the solution is a key driver of first-time mobile purchases.

“Using PayPal Mobile Express Checkout, we this, we typically see an increase in conversions in excess of 40 per cent, and two thirds of those who complete the purchase had never previously completed a payment via a mobile website,” he says. “So it enables the merchant to capture new customers they would otherwise not have captured, through a mobile transaction. It’s an absolutely critical part of our strategic array.”

Clearly, mobile is a big part of PayPal’s future. The company took $4bn of mobile payments in 2011, a figure it forecast to increase to $7bn this year. Even this figure, says Gauthier, is due to be revised upwards. And underpinning everything, he says, is the quality of the experience.

“We don’t compete on price,” he tells me. “We compete on what we can do for merchants and consumers in terms of providing a better experience and creating sales uplift. The uplift in sales that merchants see, and the quality of the experience that consumers get with PayPal, is second to none. The traditional payment industry has allowed itself to get caught in a situation where they keep talking about rates. We prefer to focus on increasing value, and delivering a high quality payment experience.”

Patrick Gauthier is head of product marketing & business operations at PayPal’s Retail Services division