PayPal digital wallet to drastically innovate how money flows

Sneak peek at new innovations

At the South by Southwest Interactive conference in Austin this week, Sam Shrauger, VP of global product and experience at PayPal presented the PayPal digital wallet for the first time, but gave a sneak peek to blogger Richard Brewer-Hay at a desk inside a Hyatt hotel room prior to Shrauger’s presentation. It has been said that Shrauger’s presentation was too full to allow everyone in that wanted to see the unveiling.

Instead of replacing the point of purchase function, PayPal has completely redesigned what accounts your payments come from, thrown in loyalty points and coupons along with gift cards, and rolled in payment installments, totally overhauling how money flows. The company is not exactly famous for having top notch customer service or intuitive features, but this innovation seeks to renovate the entire experience and has a good chance at reclaiming lost market share in their competitive industry.

What innovations will be made

PayPal says the following will become possible when they roll out the digital wallet features this May:

• Separating the purchase from the payment: Buy something in a store, take it home and decide later how you want to pay for it. PayPal is the only wallet that will offer a 5-7 day grace period for consumers to change their minds.
  • Switch from one funding source to another
  • Decide to pay over time in installments
  • Apply different sources of value (gift cards, airline miles, loyalty points, etc.)
• Personal Lists: Search for items, compare prices and create lists of things you want to buy for a variety of situations.
• Found Money: Your wallet will find deals and coupons for items on your personal lists once you’re in the store. Forgot about that coupon you were saving? The PayPal wallet won’t.
• Spending Rules. Create specific “set asides” like travel funds, set rules by purchase amount, tie specific payment instruments to specific merchants – all in your wallet, without setting up any new bank accounts or opening any new credit cards.

Shrauger explained in a statement how these features apply to everyday life:

• Let’s say I want to combine the value of 10,000 airline miles with a $100 gift card to pay for the new TV I just bought.  There’s no way I can do that right now – but the PayPal wallet will.
• Or what if I want my money to automatically filter into separate “funds” – one for groceries, one for travel, one for entertainment – when I get my paycheck every week.  Then, at the grocery store check out, the payment is automatically pulled from the fund I’ve earmarked as grocery money.
• Sometimes I need to make a big purchase that I’d like to pay for in installments – but do not want to put it on credit. If I pay with PayPal, the retailer gets paid upfront by PayPal, but my money will be deducted in equal installments over time. This flexibility with your own money has never been possible before in the digital world.

“Information became more powerful,” Shrauger said, “more useful when it became digital and people started connecting it in new ways – “the mash up.”  Our money is digital now, too, but we’re not maximizing its power yet.  And while moving all our financial information to our mobile phones is fine, the reality is that mobile wallets aren’t that much different than physical wallets. They don’t allow us to think about how we can make all the sources of value in our lives work better for us.”

Video demo of the digital wallet

Below is roughly 20 minutes spent demonstrating the new features, but with an innovation this big, merchants, service providers and even lenders should get to know these new options as it changes how money flows in all directions.