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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.”