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September 17, 2024
Can Will Ferrell Help Bring PayPal to In-Store Payments?
PayPal, which has long dominated online payments and peer-to-peer payments via its Venmo app, has launched its largest-ever marketing investment to promote using PayPal in person.
The campaign, starring Will Ferrell, highlights PayPal’s new 5% cash-back rewards program when paying with the PayPal Debit Mastercard. The comedian is seen shopping at a supermarket, a fashion boutique, and a lemonade stand while using his PayPal debit card and intermittingly singing Fleetwood Mac’s hit, “Everywhere.”
Under PayPal’s enhanced rewards program, PayPal Debit MasterCard users choose a monthly category of spending, such as groceries or clothing, to receive 5% cash back on up to $1,000 in selected category spend per month. The rate is aggressive considering that a report from purchase rewards firm Valuedynamx found only 24% of debit cardholders earned cash-back rewards in 2023, compared with 74% of credit cardholders.
Users can also stack cash-back offers on top of their monthly category by saving offers in the PayPal app from brands including Sephora, Domino’s, DoorDash, Instacart, PetSmart, and others. For example, if a DoorDash customer selects “restaurant” as their monthly category, they will receive 5% cash back for using their PayPal Mastercard and another 10% cash back if they save a deal from DoorDash in the PayPal app. The 15% total rewards are automatically applied when checking out with PayPal.
PayPal also introduced a feature called auto-reload that lets users set a balance threshold on the debit card that automatically tops up if it drops below the customer’s chosen amount.
The program comes as debit card usage is increasing with particular appeal to Gen Zers seeking to stay on budget. According to an EY report, Gen Z prioritizes keeping within their spending limits and avoiding the fees that come with credit cards. According to an October survey of more than 2,100 U.S. consumers from PYMTS, 44% of respondents had paid for their most recent in-store purchase via debit card, while 28% paid with a credit card.
Also, as part of PayPal’s updated rewards program, customers can now add their PayPal debit card to Apple Wallet, allowing in-store shoppers to take advantage of “tap to pay” mobile wallets and enabling PayPal to capitalize on the expected growth of mobile pay.
A recent report by Worldpay predicted digital wallet use in the U.S. will more than double from 15% in 2023 to 31% of POS transactions by 2027 while credit cards’ share slides to 34% from 41% and debit cards to 23% from 28%.
PayPal’s push to gain a foothold in in-person purchases is part of an ambitious plan by Alex Chriss, who joined PayPal as CEO last year from Intuit, to drive revenues beyond transaction-related volume. The move pits PayPal into direct competition with tech companies and banks, with Apple and Google already taking some share in mobile payments.
At a Goldman Sachs conference last week, Chriss said PayPal has been used by 80% of U.S. consumers over the last few years, but it’s “almost all online.” The rewards card is about “creating habituation” to incentivize in-person use and greater online use. Grocery and gas ranked as the top two chosen rewards categories in early beta testing. Chriss said, “These are everyday purchases that people need to put more money back in their pocket and there are things that you would never have thought of using PayPal for in the past. So we are starting to change mindset.”
Discussion Questions
What do you think of PayPal’s enhanced rewards debit card and its opportunity to support in-person payments?
How should PayPal be positioning itself for growth in the evolving payments landscape?
Poll
Loading …BrainTrust
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
Brian Cluster
Insights Consultant
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This looks like a creative campaign, but I don’t think it moves the dial in a significant way. PayPal cards are competing with a whole raft of other banking cards and their associated rewards. There might be some switching or new account openings based on people becoming more aware of the rewards, but I don’t see that PayPal is offering anything that doesn’t already exist from other card providers. PayPal as a payment mechanism is up against Apple Pay and Google Pay – both very established ecosystems which are inherently linked to phones and their operating systems and are, therefore, very difficult to compete with.
If they had launched this three or four years ago, they would have captured significant share. But the ubiquity of options now limits their ceiling (and who wants yet another card?) Going to Europe this summer & seeing how dominant Apple Pay has become there, it’s easy to envision the same happening Stateside in another couple years. The window for PayPal is closing fast…
I think it’s yet another way for businesses to lose money (for those who found “free shipping” wasn’t costing them enough.) The appeal – for customers, that is – is obvious…and if Paypal is willing to underwrite the costs themselves, hurrah! otherwise…well, see my opening sentence.
Younger generations see credit cards as a trap, so this may well catch on. And Will Ferrell is genius.
I spotted a Will Ferrell TV ad just the other day and thought it was an effective introduction to using PayPal for tap-to-pay store interactions.
I like using PayPal online for some purchases, especially when I don’t know the vendor well and don’t want to expose my debit card info. For a store purchase, a PayPal virtual debit card seems to add another layer to an interaction that already uses Apple Pay or Google Wallet.
The prospect of incentives may win over some younger customers who are more flexible about their payment habits. But there are multiple hand-offs happening here and the cash-back has to come from somewhere.
Merchants will resist if they perceive it’s coming from their pockets. Since debit cards earn no interest for the issuer, how will PayPal make a living on this?
It is a smart campaign to increase the awareness of PayPal as an option for in-store payments. Payments are a learned and habitual practice and most consumers don’t think of PayPal as an in-person payment option. With the 5% cash-back rewards it will inspire more shoppers to try this option. Some of those that try it, will potentially become loyal PayPal payment users. It is a numbers game.
The PayPal card needs to stand on its own merits, of which it appears to have many. The commercial is cute but Will Ferrell isn’t a magic bullet.
As consumers and in particular younger consumers use more of the non-bank-oriented payment options in physical retail, the opportunity is opening for digital wallets. Having the ability to be everywhere and have a cashback bonus of 5%, could be successful in converting some of the google and apple wallet users. I think that the “Everywhere’ positioning and true execution may be more important because other vendors such as Apple is not available in many retailers, and I often see Apple users disappointed when they can’t use Apple pay.
So signing Will Farrell is going to position PayPal as a major player in payments? I hope for their sake it is that easy. Many people still do not understand what PayPal is or does, and because of that going out with a major campaign is smart.
Will Farrell aside, this is a complicated story to tell. Debit card vs. credit card, cash back, why a physical card is better than swiping your phone… I’m not sure this will be a big win for PayPal. They are late to the market, Apple and Google are already well entrenched Worth mentioning that PayPal has trained their target customers that PayPal and Venmo are app-based platforms, now they’re supposed to get excited about using a payment method that many came to the app specifically to avoid? It’s going to be a difficult slog for them to make this a winner.
The campaign with Will Ferrell will help create awareness, but it will take customers using Paypal a different way than they are used to for this to work. Paypal is doing it right. They already have strong usage. Now they need to train customers to use the payment method like a credit card in traditional retail sales, not just online. They are giving customers a big incentive – 5% cashback on certain purchase up to $1,000.00. The airlines did the same thing when they wanted passengers to book and check-in online. They offered extra miles. Incentives will get customers to try. That’s what Paypal is doing. I think they are poised for success.
Ad campaign got my attention but not enough to add yet another card. Beauty of online PayPal is the use of existing cards. This solution is not that.
Will Ferrell got our attention, but the 5% cash back is a strong, captivating offer that will drive action, especially with such a consumer focus on value. This offer will move the needle for Paypal, but it’s only the start if it is to see meaningful penetration and will have to think about how it plays into Apple Pay and other wallets to drive adoption.
Getting customers and merchants to want to add and use PayPal among several existing options is tough because there isn’t enough meaningful differentiation or additive user benefit here, not even a 5% offer. The media campaign looks fun, and Will Ferrell gets attention, but likely not enough to gain traction up against imbedded habits and happy customers feeling satisfied using other platforms.
Offering cash back and the chance to stack extra offers is a strong incentive for using the PayPal debit card in stores. It’s a smart move, especially as more people are turning to debit cards and digital wallets for their everyday spending.