Schulman Sets Goal to Boost Usage As PayPal Swallows Xoom, Expands One Touch Checkout

On the eve of his company’s separation from long-time parent eBay Inc., PayPal Inc.’s new chief executive on Thursday let it be known he intends to dramatically boost usage among PayPal’s 169 million active accounts by stressing single-touch checkouts and new capabilities like Xoom, the online-remittance service it is buying for $890 million.

Dan Schulman, who is taking over as chief executive of PayPal with its expected spin-off Friday, also said his payments service will support Android Pay, the new mobile wallet introduced in May by Google Inc. and expected to launch later this year.

“We want to inspire our customers to use the PayPal app two to three times a week rather than the two to three times a month we see today,” said Schulman, who spoke during a quarterly earnings call for eBay, the last such call for a combined eBay/PayPal entity. Former American Express Co. executive Schulman came to PayPal as its president in September.

PayPal and eBay will begin trading Monday as separate, publicly held companies. EBay acquired the payments company in 2002.

PayPal generated 6.4 transactions per active account in the second quarter, up 14% from 5.6 in the same period last year. That translates into 2.1 transactions per month. While Schulman said that measure “rose substantially” in the quarter, he laid out several plans to “move PayPal from being just an occasional transaction to being an intimate part of our customers’ lives.”

One key part of that strategy, he said, is the new One Touch technology, introduced in September by PayPal’s Braintree unit and now rolling out to PayPal’s platform. The technology lets users, who log in separately, check out on merchants’ mobile sites with a single click or touch, a process PayPal expects will reduce abandonment rates and boost merchant sales.

Schulman said he expects One Touch will be available for half of PayPal’s transactions by the end of the year, up from about 5% currently. “We’re doing this in a disciplined fashion,” he said, with introductions so far in the United Kingdom and Canada as well as the United States. He did not project a date by which the technology will support all PayPal transactions, though he said PayPal will begin to roll it out “to most major markets” by the end of the year.

Some 30% of PayPal’s transactions are now mobile payments, Schulman said. For the latest quarter, that comes to almost 325 million payments, up 42% year over year.

One Touch has been available for some time to users of Venmo, the person-to-person payments service that came to PayPal with the 2013 acquisition of Braintree. Schulman held up Venmo as a model for the kind of consumer engagement he expects PayPal overall to achieve. “With Venmo, they use the service two to four times a week,” he said. Venmo in the second quarter processed $1.6 billion in payments, up 247% year over year.

Schulman was equally upbeat about PayPal’s newest capability, the international remittance service Xoom. This, he said, will also help increase customer engagement and usage. “The acquisition of Xoom is a good example of that,” he said. “When we apply that to scale, and with our global reach, that gives us a tremendously powerful flywheel for the acquisition and engagement of the consumer.”

Schulman said Xoom processed $7 billion in remittances to 38 countries in the 12 months leading up to March 31.

PayPal’s in-store gambit, which has languished for the past couple of years, is also starting to show signs of life, Schulman said. He cited as an example the Paydiant app for the massive Subway sandwich chain, which he said has become the second most-downloaded iOS app in the food-and-beverage category. PayPal acquired mobile-payments developer Paydiant earlier this year.

For the second quarter, PayPal processed $65.9 billion on 1.08 billion transactions, up 20% and 27%, respectively, from the same period last year. Its transaction margin—which accounts for transaction revenue less expense and fraud loss—came to 63.2%, down from 65.1% a year ago. PayPal has said before that the addition of larger merchants over has exerted downward pressure on its overall transaction pricing.