PayPal Says Order-Ahead Tool Lures More Digital Wallet Customers

  • App update part of broader push to get more frequent users
  • Location technology suggests nearby merchants for coffee, food

PayPal Holdings Inc. said an updated order-ahead function on its redesigned mobile app is helping the company win more customers in the digital wallet race.

Order-ahead transactions -- which let people have their coffee and sandwiches ready and paid for when they get to the store -- are up one-third since the company updated its app a month ago to include location technology that suggests nearby merchants, said Joanna Lambert, vice president of Global Consumer Product and Engineering. Previously, app users had to scroll through a long list of participating merchants not organized by proximity. She declined to share transaction numbers.

App downloads increased 12 percent since the update debuted Feb. 18 compared with the previous week, the company said. A global marketing campaign that included a Super Bowl commercial seeks to help PayPal stand out from the cluttered options in mobile payments, said Greg Fisher, vice president of global brand marketing.

PayPal is trying to transform itself from a tool used once or twice a month by 180 million online shoppers into a day-to-day financial instrument used to pay merchants, split restaurant bills with friends, and send money around the world. PayPal separated from parent company EBay Inc. in July and CEO Dan Schulman is expanding into international money transfers through partnerships in Europe and Latin America.

Retailers such as Starbucks and Subway have their own mobile apps with order-ahead functions. PayPal’s feature helps users discover a variety of nearby merchants, including small businesses, providing a benefit to its merchants as well.

"It’s a significant part of our business, helping smaller merchants bring more customers in the door," Lambert said.

Other app updates include syncing with smartphone contacts, enabling users to easily send money or request money from acquaintances and family. That function also helps bring new customers to PayPal if they don’t already have accounts but receive requests for payments through the platform.

With 180 million customer accounts and extensive relationships with merchants, PayPal has a big head start over Apple Inc., Alphabet Inc. and other technology companies pushing digital wallets, said Gil Luria, an analyst at Wedbush Securities Inc. in Los Angeles.

“PayPal already has the most digital wallet users by far,” he said. “By allowing the tens of millions of existing PayPal app users to order food and pay in-store, PayPal is extending its reach beyond the e-commerce market.”

However, PayPal doesn’t control smartphone hardware or a mobile operating system, so it has an uphill battle against giants like Apple and Alphabet, owners of the two largest mobile operating systems in the world.

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