Before the terms “novel coronavirus” and “COVID-19” became part of our daily vocabulary, the retail industry already faced significant challenges. Many retailers met the continuing loss of shoppers from brick-and-mortar stores to e-commerce by focusing on strategies such as “buy online, pick up in store.” Once the pandemic hit, driving people into home quarantine and the economy into the gutter, the evolution of retail—and for many brands, the existential crisis—accelerated tenfold.
On July 8, the Ad Age Next: Retail virtual conference examined the consumer trends that were already underway long before the coronavirus, as well as the new practices that arose specifically because of the pandemic, including curbside pickup and contactless options for the entire shopping experience. David Gendell, PayPal Credit’s head of Network Marketing and Partnerships, joined Josh Golden, Ad Age’s president and publisher, for a Publisher’s Fireside chat at Next: Retail to discuss how PayPal Credit has been able to connect retailers with new customers in the new normal, as well as help the small businesses and communities that have been most adversely affected during this fraught period.
The following Q&A is an edited excerpt from their conversation:
Josh Golden: For many shoppers, PayPal is synonymous with user-friendly online and mobile purchases. The ability for retailers to offer “buy now, pay later” financing options at checkout is a very hot topic, both from a shopper perspective and from a retailer perspective. How did PayPal Credit become a major player in this space?
David Gendell: PayPal wrote the playbook. We were the first to bring these capabilities to market in the early 2000s. Back in Baltimore, there was a venture-backed startup called Bill Me Later, founded by veterans from the credit card industry who brought the point-of-sale financing solution to market. In 2008, Bill Me Later got purchased by PayPal and was rebranded as PayPal Credit, so we’ve been in this for a long time. There’s been about $50 billion in transactions sent through PayPal Credit since the Bill Me Later acquisition.
Josh Golden: What solutions does PayPal Credit offer for retailers in particular?
David Gendell: We drive new customers to our merchants, and we actively market the availability of PayPal Credit to our base. They love to see it, they come looking for it, and it’s available inside the PayPal wallet. But where it really works is when merchants promote it outside of that wallet. The availability of promotional financing inside their websites is so important—about 90 percent of the spend with PayPal Credit is reuse. We’ve worked very hard to deliver products at various price points. For various verticals, our core offer is, no interest if paid in full in six months on purchases of $99 or more, which is extremely relevant in the current environment. PayPal Credit’s scale, experience and innovative products have kept us relevant for retailers.
Josh Golden: Given both the number of people who use PayPal Credit and the number of transactions, you obviously already had an overwhelming quantity of data. How much has the pandemic increased the quantity of your insights?
David Gendell: The pandemic has dramatically accelerated some of the trends that we have already seen underway. In April 2020, e-commerce sales saw a 49 percent increase1, and similarly, we’ve seen these trends inside PayPal. In terms of volume, we had our largest day in the company’s history on May 1—larger than Cyber Monday, larger than Black Friday. PayPal’s net new accounts in April increased 140 percent over January and February. In that month, we also hit an all-time record 7.4 million new customers.
Josh Golden: What should brand marketers consider when using flexible financing solutions?
David Gendell: First, it’s an extremely unusual time. The trends that we have seen slowly developing over the last 10 years accelerated this past spring. Many brand marketers are likely looking for promotional financing offers, flexibility for point-of-sale payment options, etc. PayPal Credit is a loyalty accelerator: 56 percent of our users in the U.S. say they’re more likely to shop at a retailer again if they offer PayPal Credit 2, so they stay loyal to those retailers. We’re a driver of sales, and we’ve got 300 million accounts.
Among that 300 million, many are looking for flexible ways to pay, so we’re able to market our merchants to those customers. My team works on that every single day, connecting PayPal Credit merchants with that massive customer base. And perhaps most interestingly, it turns out millennials and Gen Zs love flexible financing offers, and they love PayPal Credit. We onboarded an awful lot of millennials and Gen Zs through our Venmo platform and through PayPal over the years. They’re engaged with PayPal Credit, and they want these financing options. We actively market to them. The average order values of millennials using PayPal Credit are 44 percent higher. With Gen Z, it’s 72 percent higher 3.
Josh Golden: It’s very clear that no one’s been untouched by the pandemic. Is PayPal doing anything to help support small businesses and communities in particular?
David Gendell: PayPal is and always has been a values-driven company. And over the last few months, PayPal has made strong moves to support our small business partners that are so critical to our ecosystem. In recent years, PayPal has provided $15 billion in financing to more than 300,000 small businesses around the globe. As soon as we entered this unusual time, the decision was made on a corporate level to offer a pause and repayment for those small businesses.
On April 10, we went live as part of the Payroll Protection Program. Since then, we’ve provided more than $2 billion in PPP funding to approximately 76,000 businesses. So this is actually happening at PayPal scale as well.
The PayPal Giving platform supports fundraising campaigns around COVID-19. All fees are waived for those campaigns. And very importantly, in the last few weeks, PayPal has stepped up with the Black Lives Matter movement by committing $530 million to support Black- and minority-owned businesses with a special focus on those communities hit hardest by the pandemic.
 PayPal Credit Insights Selling, Logica Research, December 2018
PayPal Credit is subject to consumer credit approval.