PayPal Maps a Fastlane for Checkout

A new way of shopping using the PayPal app and related services is in the offing.

Announced late in January, the update includes a one-click guest checkout experience, digital receipts PayPal calls Smart Receipts, a revised offers platform, and improvements to business profiles for Venmo, its social peer-to-peer payments service.

The moves come as PayPal Holdings Inc. new chief executive, Alex Chriss, works on his goal of “future-proofing” PayPal. Its stock price slumped $20 per share by mid-February from a year-ago high of $79.10.

First up is Fastlane, a new guest-checkout process that enables consumers to one-click checkout without setting up a separate account with a merchant. Much like the upcoming Paze peer-to-peer payments service from Early Warning Services LLC, Fastlane will store a consumer’s information, such as payment choices and shipping and billing addresses.

Fastlane is in testing now. Some merchants using the BigCommerce e-commerce platform have reported that Fastlane can recognize 70% of guest and checkout speeds up to 40% quicker than without Fastlane, PayPal says.

Fastlane could, indeed, boost PayPal’s e-commerce presence, observers say. “Checkout is at the core of PayPal’s identity, and if Fastlane is able to create a quick and frictionless experience that consumers like, it will help PayPal fend off the numerous competing digital wallets that have their own speedy checkout products,” says Daniel Keyes, senior analyst, merchant services, at Javelin Strategy & Research.

“Otherwise,” Keyes adds, “PayPal risks losing consumers to other digital wallets, and, over time, merchants will grow less interested in PayPal if it their customers would prefer other wallets.”

PayPal, with 426 million active consumer and merchant accounts as of the end of 2023, is wise to tap into the available purchase data.

“It makes sense for a customer to be able to use the information that PayPal has on file to minimize or eliminate the hassle of data entry for a purchase at a new merchant site,” says Thad Peterson, strategic advisor at Datos Insights. “For merchants, it should create opportunities to make sales that they otherwise would not have gotten because of the friction involved in a guest transaction.”

PayPal also is launching Smart Receipts, which enables consumers shopping with PayPal to track their purchases and receive personalized recommendations, with the assistance of artificial intelligence. They also get a cashback reward offer. PayPal says that, globally, 45% of its customers open their email receipts daily.

“What’s especially cool about these AI-powered suggestions is that we’re doing something new at incredible scale,” says Chriss, an Intuit Inc. veteran who took over as CEO in September, says in a presentation released on YouTube.

“For businesses,” he adds in the video presentation, “our suggestions are based on what we know about your shoppers and their broader shopping habits. Not just at your store, but through the scale of PayPal we can also see across the Web.”

An updated offers platform also is part of PayPal’s revamp, which launches in steps this year in the United States and then globally, the company says. This platform will provide merchants the ability to create offers based on a variety of factors, including stock-keeping units and individual products, PayPal says.

The new platform also can use artificial intelligence to organize and analyze data from PayPal transactions made globally. Merchants will only pay for performance, not impressions or clicks, PayPal says.

The PayPal app, meanwhile, is receiving an update with CashPass, a way for consumers to receive cash-back offers. “A user will simply need to tap on the offer, shop at that business, and check out with PayPal,” the company says.

“CashPass uses AI to organize personalized offers for customers based on shopping behaviors, and customers will regularly discover new cash back offers giving them more reasons to visit the app.” The new feature is expected to launch in March with Best Buy, eBay, McDonald’s, Priceline, Ticketmaster, Uber, and Walmart as initial merchants.

PayPal also is trying to spur more commercial activity with its Venmo peer-to-peer payments app. Having introduced Venmo business profiles in 2021, PayPal is tweaking them now with the addition of subscribe buttons, profile rankings, and the ability to offer promotions.

The new moves shouldn’t come as a surprise. When Chriss came from Intuit last fall to take over as chief executive of PayPal Holdings Inc., he made it plain there would be big changes in strategy very soon.

On an earnings call last month, he began delivering on that promise, asserting the payments company is going to promote so-called branded checkout forcefully as PayPal proceeds through 2024, which he called a “transition year” for the company.

“Branded checkout is a critical part of PayPal’s value proposition,” he told equity analysts on the call, held to discuss the company’s December-quarter results. This is especially the case for large enterprise merchants, Chriss said, according to a transcript of the call.

“Branded checkout” refers to instances where merchants explicitly offer PayPal as a payment option on their site rather than relying on the company to process the transaction in the background. Less than a year ago, former CEO Dan Schulman had pronounced unbranded checkout a “strategic imperative” for PayPal, a move that didn’t sit well with investors. These checkouts are processed by PayPal’s Braintree platform. Schulman retired in September.

Branded checkout is especially important for PayPal’s enterprise-size clients, Chriss argued during the February earnings call. “We’ve redesigned our branded checkout experience, creating more simplicity and consistency with the goal of optimizing presentment, increasing speed, and minimizing friction across all major checkout flows,” he said.

Chriss argued the speed and convenience of checkout will please customers and win their loyalty to both PayPal and the merchant. “Regardless of the customer we’re serving, we want to make the PayPal offerings so user-friendly, so rewarding, and so integrated into a customer’s life that PayPal is the obvious choice,” he said.

Laying further stress on checkout, Chriss underscored the importance of Fastlane. “With it [Fastlane], we can recognize up to 70% of guests visiting a merchant, reduce checkout time by up to 40%, and grow the top of our branded checkout funnel,” he told the analysts.

Chriss added he is also acting to tie together disparate elements of PayPal that have come to the company via acquisition. The effort, he said, is critical for cohesive growth.

“The company has gone through significant growth over the last few years and a lot of acquisitions,” he noted. “We have not invested enough in creating a single platform. That again slows us down when it comes to innovation, and it slows us down when it comes to being able to leverage the data across the ecosystem.”

If Chriss is reformatting PayPal to act faster on opportunity, he’s also eyeing strategies pursued by other technology companies, including Apple Inc., which has grown more active in payments in recent years (page 16).

Asked by an analyst about the opportunity facing PayPal from a regulatory change in Europe that forces Apple to open its iOS and near-field communication chip for point-of-sale transactions, Chriss did not go into detail but added PayPal is “tracking this closely. Apple is a great partner of ours.”

But Chriss added he has also acted to cut costs at PayPal, including putting through layoffs. He added that he had warned in the company’s November earnings call that the move was coming, alleging on the call that “our size was slowing us down.”