PayPal Launches Gift Cards

PaymentWeek reported that PayPal Takes An Odd Step Into P2P Gift Cards. According to the article:

"The program allows users to log into a PayPal account, select the “Send Money” option, fill in the necessary contact information, set the amount desired, click the gift box, and pick an eCard greeting to go along with it, complete with personalized message."

Soo-prise! Soo-prise! (RIP, Jim Nabors)--the recipient will need to have a PayPal account to get the money. Here's another "surprise"--PayPal has negotiated 75 deals from major merchants, and is partnering with Mastercard on a Cashback Mastercard that offers 2% cash back on every purchase.

The only odd thing here is that PaymentWeek would call this an "odd step." It's anything but odd. First of all, gifting is the most prevalent form of P2P payments, both in terms of dollar and transaction volume. Second, PayPal is sure to see some account growth from recipients opening accounts in order to claim their gift (granted, how active these accounts will be remains to be seen).

But the beauty of this announcement is the merchant deal. PayPal is leveraging its position as a leading P2P payments provider to get into retail. Cornerstone recently surveyed US consumers and asked: "If PayPal offered a general use debit card that you could use at retailers and to pay bills, how likely would you be to use it?"

Among Young Millennials (21 to 29 years old), 36% said they would be very likely to use one from PayPal, and another nearly four in 10 said they’d be somewhat likely to use it. Thirty-something year old Millennials were even more interested--half said they would be very likely to use (and might make it their primary payment card), with another third saying they would be somewhat likely to use it.

Ron Shevlin
Director of Research
Cornerstone Advisors