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00:00OWN. WHY IS IT IN YOUR INTEREST AS A COMPANY TO WORK ON THIS, TO WORK AT THIS INCOME LEVEL? MR. SCHULMAN: FIRST OF ALL, IT WAS AN HONOR TO CHAIR ONE OF THE PANELS AT THE CONFERENCE TODAY. FINANCIAL INCLUSION, OR THE WAY THAT WE THINK ABOUT IT, FINANCIAL HEALTH, IS SUCH AN IMPORTANT TOPIC FOR THE FINANCIAL SERVICES INDUSTRY TO TAKE ON. AS ONE OF THE LEADERS IN DIGITAL MOBILE PAYMENTS, THE IDEA OF USING THAT, THE COST EFFICIENCY THAT IT HAS, TO BE ABLE TO CHAMPION LOWER INCOME AND MIDDLE INCOME FOLKS IN WAYS OF THINKING DIFFERENTLY ABOUT MANAGING IN MOVING MONEY IS A HUGE OPPORTUNITY. NOT JUST FOR PAYPAL, BUT REALLY IN DRIVING ECONOMIES AND ECONOMIC GROWTH. AS YOU KNOW, IF YOU CAN DO FINANCIAL HEALTH, IT DRIVES THE DREAMS AND AMBITIONS OF SO MANY PEOPLE. BRENDAN: SO, IT'S GOOD FOR ECONOMIC GROWTH, GOOD FOR THE UNITED STATES. WHY IS IT GOOD FOR PAYPAL? MR. SCHULMAN: BECAUSE WE UTILIZE SOFTWARE AND MOBILE AND WHEN YOU CAN DO THAT, THERE IS A DIFFERENT COST STRUCTURE THAT YOU CAN DO, YOU CAN VERY PROFITABLY SERVE A TREMENDOUS SWATH OF THE POPULATION THAT IS IN PART OF THE FINANCIAL SYSTEM TODAY. THERE'S A SAYING THAT IT IS EXPENSIVE TO BE POOR. THE FINANCIAL SERVICES INDUSTRY IS GUILTY OF THAT AS WELL. BUT THAT DOESN'T HAVE TO BE THAT CASE WITH TECHNOLOGY. WE ARE A LEADING USER OF SOFTWARE IN MOBILE. WE CAN PROVIDE BASIC CONSUMER FINANCIAL SERVICES IN A WAY THAT'S AFFORDABLE, FASTER, EASIER, MORE SECURE AND LESS EXPENSIVE, WHICH IS A HUGE OPPORTUNITY FOR US. BRENDAN: THE GOLDEN EXAMPLE IS THE SERVICE IN KENYA RUN ORIGINALLY BY SAFARI COM, THE CELL PHONE PROVIDER. ONE OF THE THINGS THAT HELPED THAT GROW, AND ACTUAL PHYSICAL PRESENCE ACROSS THE COUNTRY. WHAT DOES PAYPAL NEED TO DO IN ORDER TO ACTUALLY HAVE A PHYSICAL PRESENCE IN THE WORLD THAT IS SO PRESENT FINANCIALLY? MR. SCHULMAN: WHEN IT STARTED, OBVIOUSLY IT WASN'T THE BANKING SYSTEM THAT THEY USED, IT WAS AGENTS THAT THEY USED. SO PEOPLE WOULD COME INTO THE STORES AND REFILL THEIR PREPAID MOBILE ACCOUNT WITH MONEY. WHAT THEY FOUND IS THAT IT'S LIKE PUTTING MONEY INTO A MOBILE ACCOUNT, LIKE A BANKING ACCOUNT. YOU COULD GO TO ANOTHER AGENCY TO TAKE CASH OUT. THAT SAME THING COULD BE DONE INSIDE AND OUTSIDE THE BANKING SYSTEM USING MOBILE RIGHT NOW. WE JUST BOUGHT ZOOM, A PERFECT EXAMPLE OF COMBINING THE BEST OF MOBILE TECHNOLOGY FOR INTERNATIONAL REMITTANCES THEY GO DIRECTLY TO A BANK OVERSEAS SO THAT SOMEONE SENDING MONEY TO A LOVED ONE COULD INSTANTANEOUSLY INSTEAD OF WAITING THREE OR FOUR DAYS, WHICH IS WHAT IT TYPICALLY IS WITH INTERNATIONAL REMITTANCE, TAKE THE MONEY FROM AN OVERSEAS BANK ACCOUNT. THIS COMBINATION OF USING ELECTRONIC MEANS TO MOVE MONEY IN PHYSICAL DISTRIBUTION, TO TAKE OUT CASH, CAN BE VERY POWERFUL. BUT OFTENTIMES YOU DON'T EVEN NEED THE PHYSICAL. YOU CAN GO RIGHT TO MOBILE AND ENVISION A WORLD, MAYBE FIVE OR 10 YEARS FROM NOW WHERE YOU ARE HAVING MONEY ON YOUR PHONE AND YOU ARE ABLE TO TAKE THAT MONEY OUT BY EITHER TAPPING THE PHONE OR UTILIZING OTHER ELECTRONIC FORMS. SO, THE WORLD IS QUICKLY MOVING TOWARDS DIGITAL. WE ARE A LEGAL -- WE ARE A LEADER IN THAT BUT IT STILL HAS A WAYS TO GO AND UNTIL IT GOES FULLY DIGITAL YOU WILL NEED A WAY TO TAKE THE MONEY FROM THE ELECTRONIC FORM AND SOMETIMES TRANSFER IT INTO A CASH FORM. MR. SCHULMAN: -- BRENDAN: WHO DO YOU SEE IS YOUR COMPETITORS? OTHER DIGITAL TRANSFER SERVICES OR PAYDAY LENDERS? MR. SCHULMAN: OUR MAJOR COMPETITOR IS CASH RIGHT NOW, IF YOU THINK ABOUT IT. 85% OF THE WORLDS TRANSACTIONS ARE DONE IN CASH, WHICH IS INCREDIBLY INEFFICIENT FOR THE MOST PART. IF WE CAN START TO ATTACK THOSE FORMS OF CASH, OF WHICH THERE IS HUGE LEAKAGE SOMETIMES GOING FROM A GOVERNMENT PAYOUT TO THE INDIVIDUAL RECIPIENT, SOMETIMES THAT CAN BE 10%, 20% LEAKAGE GOING ON. IT COULD BE IN CERTAIN COUNTRIES. EVEN HERE THERE IS AN INEFFICIENCY ASSOCIATED WITH CASH. I THINK THAT THE BIGGEST COMPETITOR WE HAVE IS THAT USE OF CASH. FOR PEOPLE TO TRUST THESE NEW FORMS OF DIGITAL PAYMENTS, WITH A BRAND LIKE PAYPAL THAT REALLY STANDS FOR SECURITY AND TRUST IN THE EXPERIENCE WE HAVE HAD OVER THE LAST 15 YEARS, THAT'S WHAT WE ARE TRYING TO ATTACK RIGHT NOW. BRENDAN: THE OTHER ONE IS JUST BASIC SAVINGS, BUILDING UP A BALANCE IN A BANK ACCOUNT. CAN PAYPAL DO THAT? THAT IS WHAT DEVELOPMENT ECONOMISTS SAY IS THE MOST IMPORTANT PART. MR. SCHULMAN: FINANCIAL INCLUSION IS A BUZZWORD FOR BRINGING PEOPLE INTO THE SYSTEM. WHAT I THINK IS MOST IMPORTANT IS FINANCIAL HEALTH. IT'S BASICALLY TEACHING PEOPLE HOW TO MANAGE AND MOVE MONEY IN A WAY THAT ALLOWS THEM THE SAFETY AND SECURITY THAT THEY NEED IN THEIR EVERYDAY TRANSACTIONS. MOST PEOPLE DON'T HAVE THE EXPENSES HIGHER THAN REVENUES, BUT THEY HAVE TYPICALLY A CASH FLOW ISSUE. A MEDICAL EMERGENCY, A ONE-TIME THING THAT HAPPENS -- YOU LOSE A JOB, TEMPORARILY. REALLY WHAT I THINK WE NEED TO BE ABLE TO DO IS USE DATA AND INFORMATION TO GET PEOPLE PAST THOSE ONE-TIME HURDLES THAT THEY HAVE. BRENDAN: CREDIT, NOT SAVINGS? MR. SCHULMAN: I THINK IT'S BOTH, YOU CAN USE THE ABILITY TO SHOW PEOPLE AND CONSENT PEOPLE TO DO SAVINGS. SOMETIMES IT CAN BE A CUSHION AGAINST THOSE UNEXPECTED BLOWS. NOT CREDIT ALWAYS IN A TYPICAL FASHION. FOR INSTANCE, WE DO PAYPAL WORK WITH CAPITAL FOR SMALL BUSINESSES THAT COULD NOT GET A WORKING CAPITAL. WE DON'T DO IT USING FIGHT GHOST SCORES OR TRADITIONAL CREDIT SCORES, WE BASE IT ON OUR -- ON THE HISTORY WITH US. INTERESTINGLY, 25% OF OUR LOANS ARE DONE THROUGH THE 3% OF COUNTIES WHERE 10 OR MORE BRETT -- 10 OR MORE BANKS HAVE CLOSED BRANCHES. IT IS A DIFFERENT FORM OF LENDING THAT ALLOWS GROWTH OF THE PAYPAL PERCIPIENT, GROWTH AT 20%, SIMILAR TO ONE TO 2%. IT'S GOOD FOR US IN TERMS OF FINANCIAL HEALTH AND ECONOMIC GROWTH. BRENDAN: DAN SHULMAN, CEO OF PAYPAL, TALKING ABOUT MOVING BEYOND THE PLACES WHERE THE TELLERS DON'T EXIST ANYMORE. BETTY? BETTY: IN HIS COWBOY BOOTS. THANK YOU, BRENDAN GREELEY,

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