In early April, Dan Schulman, the CEO of PayPal, was at home in California, waging his own sort of coronavirus battle on two fronts: On the one hand, he was working closely with the Treasury Department on a way for PayPal to help distribute stimulus funds via loans to small businesses as well as direct electronic payments to individuals. On the other hand, he was guiding his global workforce through a “tremendous surge” in demand for his company’s digital payment services (PayPal as well as Venmo, a mobile app), a trend Schulman attributes directly to the way the pandemic has forced people to live their lives remotely and online.
In a Q&A with Fortune, Schulman explains how the coronavirus has spurred not just increases in online payments, but new financial behavior entirely—and Schulman thinks some of those trends will persist even after the virus subsides. “We’re not going to go backwards to what was,” he says. “We’re not going to be using cash nearly as much.” Read on for the full interview, which has been edited for length and clarity.
I was hoping you could set the scene a bit. We have this unprecedented situation, much of the economy has ground to a standstill. One thing we’ve been intrigued by is how that’s affecting the financial system, and how Americans are interacting with their finances.
DS: The impacts of the virus are profound, people are sheltering at home, they’re not going out. And that’s changing the way that all of us work, and the way all of us live. So you’re seeing that with increased use of all things digital. I’m on the board of Verizon, and we’re seeing a tremendous increase in the use of wireless services and the use of the Internet in general. And along with that, people are using digital payments in ways that we really never imagined before. Not only is there a tremendous increase in the use of digital payments, but the way people are using them are also changing.
What are some examples of the increases you’re seeing?
Over the last couple of weeks the number of new customers that have signed on to PayPal or Venmo has increased dramatically. I mean, in some cases doubling. And in general we’re seeing different usage patterns emerge—people are spending a lot more online on the weekend. We’re seeing a tremendous increase in shopping in verticals like groceries, electronics, home and gardening. Gaming is exploding.
But what really intrigues me, and what we’re seeing in ways that we never have seen before, is this increase in spontaneous giving to people who need the money. Sometimes from friends and sometimes from strangers, over these peer-to-peer networks like Venmo or PayPal. That has skyrocketed. And we are now doing a hashtag called #Venmoitforward, where if we see somebody doing a random act of kindness, we’re giving them $20 into their Venmo account, and we’re saying to them, do even more. What I’m seeing are people really stepping up to the everyday heroes that are out there right now—cashiers who are at grocery stores or pharmacies, first responders, nurses, doctors. These are tens of millions of dollars that are flowing in terms of giving.
One interesting thing is that on Venmo, people use emojis to signal what they’re sending money for. And it used to be that the top emojis for us are a pizza emoji, that kind of thing. The emoji that’s trending the most is the medical mask emoji—we’ve seen a 375% increase in payments using that emoji. We’re also seeing a number of different celebrities start to step in and help their fans. Taylor Swift is giving money through PayPal to her fans who most need it. Ariana Grande is doing that. And I think this is a trend that’s not just emerging, but is really exploding.
When you think of where things stood in the last crisis, so say 10 years ago, are fintech and payments technologies set up to help people in a different way now than they were back then?
Well I think you’ve seen an explosion in mobile over those last 10 years. And so when you have a smartphone, you have all of the power of a bank branch in the palm of your hands. And at the same time you’ve had an explosion in the capabilities of digital payments. And as you think about it, as we’re sheltering at home, you also have people who are unbanked—almost 25% of Americans are underserved right now. They may not have a bank account. Traditionally they would have had to go to a check-cashing checking location, and now they’re sheltering at home. But they can do that right from their mobile phone, they can take a picture of a check, deposit it onto a platform like a PayPal or a Venmo or deposit it into a bank account. So what we’re seeing is a tremendous surge, both in PayPal core and Venmo. Many populations that may not have had PayPal or Venmo [in the past] now need to avail themselves of that. And so we’re making it as easy as possible to handle the surge in demand. The use of technology now is enabling, I think, these previously underserved populations to become part of this digital economy.
You’ve been working with the Treasury Department on ways PayPal could help distribute government stimulus money to Americans as well as small businesses. [Note: after this interview, the U.S. Internal Revenue Service made it possible for people eligible for stimulus payments to elect to receive the money electronically via direct deposit, including into a PayPal or Venmo account if they choose.]
Making sure that those checks get to those populations that most need them is something that we’re working with the government on. We have a lot of customers who don’t necessarily have bank accounts, but do have accounts with PayPal or Venmo. We need to be sure that there’s strong authentication, which we pride ourselves on, to make sure that those checks are going to the right people.
How new would that be for you, in terms of working in that capacity with the government?
Well we work with the different parts of government, whether they be state governments or municipalities around the world, to do the everyday civic things that people do—pay taxes, get tax refunds, pay parking tickets, utilities, that kind of thing. But doing something at this scale with the federal government would be something unprecedented. It’s not easy to go do that for the government. How we do it, and the best way to get that done as rapidly as possible is still evolving toward what I would consider to be a long-term solution. This is clearly not a moneymaking effort on the behalf of PayPal. This is a civic effort, and the right thing to do, for all digital platforms.
A portion of our customer base has gotten their tax refunds directly onto our platform. And those that have done that will be able to also receive those disbursement checks directly as well. Most of these things are not brand new, they’re just not at the scale that is being contemplated right now.
We’re hearing a lot of bad news and negative trends over the past few weeks. But do you think, with the ‘surge in demand’ you mentioned, is there any positive effect that you see coming out of this?
I do think, as we’re seeing a new era of digital payments, that we’re not going to go backwards to what was. We’re not going to be using cash nearly as much. I think we’re all going to be aware of hygiene going forward. I think the use of QR codes in store is going to continue to increase, as we’re seeing it increase right now. And I think the more we can move into a digital economy, the more inclusive that can be. And we need to be sure that happens, because I do think digital forms of payments can be much more time-efficient—you don’t have to wait in line at a cash-checking location, you don’t have to wait in line to pay your bills. And number two, it can be done much less expensively. Sometimes it can cost 2% to 5% to cash a check, and then you’ve got to pay another fee to pay a bill. If you can do it electronically I think we can save a tremendous amount of money for those populations who most need that savings. And so I’m hopeful that this is a tipping point in the way people think about managing and moving money, from the physical into digital, because I think that can really drive a tremendous number of benefits to those who most need it, and to our economy and society.
It sounds like you’re seeing a lot of beneficial business trends for PayPal, and meanwhile we’re hearing a lot of bad stories about business. Is it possible, do you think, that PayPal will buck the trend, and potentially have a very positive first quarter of this year when we’ve been dealing with this pandemic?
I think PayPal has the opportunity, when we come out of the pandemic, to be a much stronger company than it was coming into it because of all of these trends. But like every company, we’re impacted by it. Our customers are impacted by it. We support a number of travel companies, and different ticketing companies and event companies, and so we’re not immune from some of the trends that are happening, but we’re very fortunate in that we have a number of countertrends that are happening—the explosion of digital payments, the explosion of net new active [users].
So we’re doing a number of things right now to be helpful in this time of crisis. We also said we’re not going to lay off any employees because of COVID-19. But I think if you put your employees first and you put your customers first, then nobody forgets that, and you come out of this in a really strong position, because you know, people are always there in good times for you. It’s when they’re there in more difficult times that people remember.
I meet every single day with my team on video calls like this, and one of the things I’m telling them is, this is our time. This is our time to step up, to help.
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—The coronavirus crisis is fintech’s biggest test yet—and greatest opportunity to go mainstream
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—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
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