Although the covid-19 virus pandemic forces shoppers to stay away from stores, they can shop on their mobile phones and computers. In this context, the financial technology giant PayPal has set record performance in the most recent year. PayPal operates in more than 200 countries and transacts in more than 100 currencies . Its business volume last year was amazing, processing 1,000 transactions per second during the holiday shopping season. Last year, PayPal processed a total of 15.4 billion payments, with a total amount of US$936 billion. PayPal also launched its latest products, including the introduction of QR code payments in 20 markets around the world to meet the demand for sterile transactions. Another major move is to help cryptocurrencies such as Bitcoin enter the mainstream world by adding cryptocurrency services. Dan Schulman, CEO of PayPal, recently accepted an interview with TIME to discuss the future of cash, the security of central banks and cryptocurrencies .
The following is the essence of the interview (the content has been deleted and changed, and you can focus on Q6-Q9):
Q1: To what extent has the fear of contracting the virus promoted the continuous changes in people’s shopping and payment methods during the epidemic?
There are two things that have greatly accelerated the trend of Crypto payment, the shortest time is three years, and perhaps the most five years. By the way, this is just continuing to accelerate growth. First of all, we have no choice. We are all isolated at home. We need to live. We need to buy things, and everyone has to buy things online. In the end, this need becomes convenience. People realize that they don’t have to line up at the cashier; it can be delivered at any time, and they have more choices and more different transactions.
Second, because of concerns about hygiene, everything is digitized, even in stores. People want to make sure they can protect the cashier, and customers want to make sure that they are safe. No one wants to touch cash, which has led to a significant increase in the use of Crypto forms, not only for payment, but also for checking menus and quotes in stores.
Q2: What will your business look like in the next 5 to 10 years?
First, the retail industry has fundamentally changed. Its strategy will basically change from “How do I attract people to the store?” to “How do I optimize home delivery? How do I optimize around all Crypto, online and offline things?” In fact, it’s one of the two. The difference between them disappeared. This means retailers need to think, where do they meet consumers? Consumers are not just visiting their website. They will appear on TikTok, PayPal or other large consumer platforms. Wal-Mart wants to acquire TikTok partly because they want to put shopping functions on this platform. We call it Contextual Commerce.
The same is true within PayPal. We know that people will start to use wish list shopping tools. Wish lists are actually a form of creating a personalized demand curve. This is what you want. This is the Price Point you want: if the retailer can provide what you want, you will buy it. Therefore, retailers have come to the place you are looking to provide you with personalized service. The retail industry will undergo tremendous changes.
Q3: How do we pay?
There may be 6 to 10 super apps (Apps) in development . You don’t need to install 50 apps on your phone, because you can’t remember 50 user names and passwords; you don’t want to provide your own financial information to every app; you can’t remember the navigation system of all apps . These super applications are basically the middle layer of other applications, so you only need to log in once and have a universal password. All your data and information are in one place, and you can feed the required information for the products and services on the platform. It will be simpler and easier for consumers.
Q4: So cash is no longer king?
Ten years from now, you will see a significant drop in cash usage. All payment form factors will flood into the mobile phone. This form of credit card will disappear, you will use your own mobile phone, because compared to just using a credit card, mobile phones can bring more value. Therefore, when all these things start to happen, central banks also need to rethink monetary policy , because people cannot issue more paper money to the financial system because people don’t use paper money. This is the emergence of Crypto currency.
Q5: What does this trend toward Crypto currency mean for the financial system as we know it?
In the next 5 to 10 years, you will see more changes in the financial system than in the past 10 to 20 years. How do we view the modernization of the existing financial infrastructure? It needs to be modernized because it is very inefficient now. If you cash a check, it may take three days to get the money. If you make an international remittance, it takes seven days to get the money. And it’s too expensive. The “commission rate” of the global financial system is approximately 2.8%. By the way, in the past 10 years, you may have expected a decline in transaction volume and technological progress, but the worst part of this 2.8% is that if you have less income or are not within the system , and you are not rich, then This commission rate is equivalent to 1000 basis points instead of 280 basis points. If you are really rich, the commission rate is 25 basis points. So, when you think it is expensive, exclusive and efficient, we really need to start thinking, how do you modernize this system? Is there a way for you to do things more efficiently in a more cost-effective and inclusive way, and to add more utility to the system?
Q6: What is the difference between Bitcoin and other cryptocurrencies issued by the central bank?
Digital currencies issued by central banks can also use distributed ledger technology (DLT) or other modern technologies, but they basically digitize legal currencies such as the U.S. dollar. The Crypto dollar will be fully supported by the U.S. government, but done Cryptoly. This may allow the government to open up Fed funds to institutions other than banks, possibly companies like PayPal, where you can directly fund Crypto wallets from the Fed . You don’t have to mail a stimulus check—just send it directly to their Crypto wallet via Crypto currency, which can be accessed instantly, without cost and friction.
Q7: You have adopted a very cautious attitude towards cryptocurrencies and made a lot of investment before launching consumer products . Why choose now?
We have been studying cryptocurrencies and DLT for six years. But I thought it was too early, and I thought that cryptocurrencies at the time were more like assets than currencies. They are too volatile to become a viable currency. And there are still too many people who don’t really understand the industry they’re going to enter. What we really want to do is to make sure it becomes more mainstream so that we can work hand-in-hand with regulators before launching any product on the market.
Q8: What is the demand for these new services?
The demand for encryption services is several times what we initially expected. Very exciting.
Q9: As all our assets turn to digitization, how can we prevent more and more complex cyber crimes?
We need to fight cybercrime in two ways. First, you must build wide moats, towers and turrets to keep as many bad people out as possible. But it is impossible to shut out the bad guys because the username and password have been stolen. Therefore, the real trick is how to prevent data from moving outwards. Therefore, if you (using PayPal) conduct a transaction, it is not your username and password that give you the authority to do so. We look at 130 different variables in each transaction, in milliseconds, to make sure that it is you (in the operation). The idea of big data is to truly understand who you are, not who you say you are. Things like two-factor authentication are elementary school things. It requires far more complex than this, and we have spent as much resources as possible to ensure that we do our best to prevent data from leaving our system illegally. But I want to say to every company around the world: This is a problem that should be the first and core issue.