Paula Paschoal, general manager of PayPal in Brazil, talks about the future of the payment sector and the plans in the national market: the company will enter the war of credit card machines and offer credit

During the last event of PayPal, which occurred in the beginning of August in New York, in the United States, Paula Paschoal, director general of the Company in Brazil, revealed that it will expand the portfolio in the country: The pioneer among global digital portfolios would debut in credit and acquiring markets, thickening the team of credit card machines.

Despite not having a definite date, a large portion of the Working Capital, which already grants loans to entrepreneurs in the United States, Mexico, Germany and Australia; much more of your mobile payment processors can enter the market later this year.

The operation with its own machinery has been speculated since 2018, when the company purchased the swedish company iZettle. At the time, PayPal disbursed about US$ 2.2 billion, setting up the largest purchase of the american company up to the present day.

“The acquisition has as one of its main objectives to be increasingly present in the lives of small and medium-sized enterprises”, says Paula Paschoal to CWS.

In Brazil, where the climate is very fierce with the dispute between consolidated and new incoming players, PayPal sees gains for both the consumer and the entrepreneur.

“Competition always favors the consumer. But in the case of POS solutions, it is also working out for those who sell, because it promotes cheaper services and gives, mainly to small entrepreneurs, more control over receivables, improving their financial health”, complements.

If the fight is heating up with the acquits, the climate is no different with the digital wallets. Today, the PayPal wallet divides the market with players like Apple PaySamsung Pay and Google Pay.

It is estimated that Apple’s portfolio is already used by 252 million people in the world, according to analysis by Loup Ventures, approaching PayPal, which reached, this year, the mark of 286 million active accounts. In Brazil are 4 million. “We are growing, in the country, about 25% a year since 2017”, Paula stresses

Accelerated growth is a reflection of what awaits us in the near future. “There is no reason to believe that you will need to have a card in your pocket to pay for a product or service within a few years”, says the executive.

Asian countries are proof of this, as the method of payment via smartphone dominates shops and restaurants. Driven by the Alipay and WeChat Pay services, from Alibaba and Tencent companies, the disuse of paper-money and plastic cards is already reality. “In China, even some free trade fairs no longer accept payment that is not made by QR Code, via mobile device”, adds Paula.

To have an idea of the strength of this movement, the two chinese companies have 92.7% market share, according to a report from Analysys International Consulting.
Around here, the method of electronic payment has everything to follow the same steps of the Asian countries, after all, 60% of Brazilians already have a smartphone, according to data from the Pew Research Center. The country, alongside South Africa, leads the use of Internet-connected mobile phones between emerging countries.

“The use of the smartphone as a means of payment should grow a lot in the coming years. The transformations are already happening. In the field of business, the ones who will survive are those who stay in permanent change”, analyzes Sérgio Bessa, professor at FGV.

In the following interview, Paula Paschoal discusses the future of the means of payment and as 5G technology may impact the sector:

CWS: What is the balance of this first decade of operations in Brazil?

Paula Paschoal: The brazilian is a technology enthusiast. I like to cite the example of taxi applications. Four years ago, it would be unthinkable to take a cab without having any cash on hand. And you had to go to a taxi stop or pick it up on the street. Today, it is unthinkable to take a taxi without the use of an application. And pay virtually. What is the motive? Because it is easier, faster, more practical and safer. People don’t want to waste time on trivial things.

Proof that the future is digital – and, more than that, mobile – the movement of the country’s main banking institutions is towards digitization. There is still plenty of room to grow, an important market in perspective.

The digital payments scenario in Brazil is evolving rapidly. With 209 million inhabitants, high rates of smartphone penetration and adoption of mobile Internet (62%, according to data from the Pew Research Center), there is tremendous potential for PayPal in the country.

CWS: In this scenario, how are you gonna position the digital wallets and the machines?

Paula Paschoal: Based on what we know about security, commodity and practical, I’d say the digital wallets are the future of electronic payments. They unite functioning that is very importante in current day. As for the machines, it all depends on which technology will be more capitalized in the world.

If it’s QR Code, the machines will become less important. If it’s NFC (that make payments viable for approaching, through cards and accessories), they ll have plenty of life ahead of us. But the future will make everything online to the point of not needing any intermediary device.

CWS: How long?

Paula Paschoal: The money on paper will be the first to disappear, then it will be the time of the plastic money, the debit cards and credit. The world will be 100% online at some point. But in countries like Brazil, this change will not happen at the speed we’d like.

CWS: Even more so because, currently, there’s a volume of 6,27 billion paper money circling in the country, the equivalent of R$ 232,7 billion. A gigantic number…

Paula Paschoal: Yes, however, money in cash days are numbered. But it won’t be something we ll see so soon, at least in Brazil. Making money costs money. To produce R$ 1,000 in R$ 100 bills, the expense is R$ 322,26. The same amount in R$ 1.00 coins R$ 467,70.

They’re calculations from the Central Bank. That means that part of value is lost in the production process. Even so, these days, the volume is huge and this number just goes up. In 2011, for example, there were 4,48 billion bills, worth R$ 136,11 billion. Today, the number is much higher, indeed. One of the reasons the increased rise may be the false sensation of merchants and the population that the payments made with bills and currency have no cost, unlike other means, who charge some kind of tax. That’s a misguided vision. Since the production of bills for distribution is payed in bank agencies, there is an elevated cost that is unknown to people

Paula Paschoal, general director of PayPal in Brazil: “The digital wallets are the future of electronic payments”. Photo: Disclosure

CWS: Will the arrival of 5g technology be able to leverage the digital market in Brazil?

Paula Paschoal: One of the most important advantages is low latency. That refers to the response time between the click and the connection, which means when the network answers and leads you to the site. In the current networks, the waiting time revolves around 20 milliseconds. It doesn’t seem like much, but with the 5g, the latency reduces to a millisecond.

We won’t just have to disposal a good level of coverage as we can also send and receive data to higher speed than we have today. It’s not only gonna benefit the consumers, but it will also have a huge impact on the economy, since the drastic increase of data transmission enables to perform more agile transactions of all sorts.

CWS: On the side of the entrepreneur, how does Paypal’s solutions have increased conversion rate on digital platforms?

Paula Paschoal: PayPal has a platform called one touch, whose mission is to facilitate the purchase online by way of the consumer, which, was calculated, to increase the sellers conversion rate. The system, based on artificial intelligence and machine learning, creates a behavioral identity of the user and facilitates the online purchase in over 11 million establishments in the entire world that already has the system within its checkout process.

It allows the client to go shopping without having to enter the password and the login every transaction. And just that fact provides a better experience for a consumer, especially in purchasing via mobile, in which the facility of the payment is essential to the success of the purchase. The system represents a higher rate of conversion to the merchant, because the pay operation is easier, the abandonment of the shopping cart becomes smaller and volume of sales bigger. The OneTouch is the fastest adoption product in the history of PayPal. On a global level, over 123 million clients on the platform already utilized the service in their daily purchases.

CWS: In a ascending market like Brazil, how does PayPal plan to be positioned in the mid term?

Paula Paschoal: As the best global platform for electronic payments and the main option for buyers as for sellers, for consumers as well as for shop owners, with full security. That’s the reason why we keep two innovation labs in the U.S. and that’s why we invest so much in developing new anti-fraud tech.

(Article published in August 2019).