Your money is a mess. In principle, you’ve got this pot of it somewhere. But trying to use it actually turns out to be a headache and a hassle. Which card should you use at any given time? Why do you have to pull out so many bits of paper and plastic when you’ve got a coupon, a gift card, and a credit card to use at the same store?
PayPal agrees. That’s why the company introduced a new set of digital wallet tools today at the SXSW conference in Austin, TX. It’s the first time in the company’s 13-year history that it’s redesigned and re-architected the system’s payments experience, Sam Shrauger, PayPal’s vice president of global product and experience, tells Fast Company.
“When we started, we were about making money work better on the web,” he said. “This is about making money work better everywhere.”
Among the features being offered is a “grace period” that allows you to switch how you pay for things within seven days of making a purchase. For example, if you pay for an item with a debit card but then realize your paycheck won’t arrive in time to cover your bills, you can log in to your PayPal account and tell the system to pay with a credit card instead. During that grace period, you can also choose to have a bill paid for in installments, instead of all at once.
The wallet system will also allow you to intelligently pay for an item using multiple mechanisms, such as a gift card and a credit card. For example, if you want to use a coupon, gift card, and credit card to pay for an item, PayPal will make it possible for you to pay with a single swipe (it will figure out to use the coupon and the gift card first) rather than having to pull out three separate items at the register.
All of these features, which will be available starting in May, are being bundled into PayPal’s “digital wallet”–an enhanced version of the traditional PayPal account that will connect not just with the bank and credit card accounts you’ve synced to it but also to new forms of payments, like coupons and gift cards.
Several companies are diving into the mobile payments space, from Google with its flawed Wallet to the disruptive Square. But Shrauger says the possibility for innovation is far deeper than what most consumers realize. Instead of simpy taking analog mechanisms and make them digital, PayPal wants to change how you think about paying altogether.
The core idea underlying the redesign is that money, except for cash, is basically digital bits. When you make a payment, “bits” are simply transferred from one account to another. But many financial systems still use paradigms developed in the analog world to govern how people manage their money. That needs to change, Shrauger says. (Or, as Marc Andreessen might put it, treat money like software, rather than as physical objects.)
Why should you have to pull out three different cards (coupon, gift card, credit) to make a payment? Why shouldn’t you have an intelligent digital wallet that can take the instruction “pay for this item” and then figure out, on its own, the best mechanisms to use to cover the payment?
“The digital wallet enables the consumer to create the buying experience that works best for them,” Shrauger says.
Other capabilities unveiled today include the ability to create funds, like for a vacation, and instruct the system to add money to it according to certain rules–“Add $10 from my checking account every week,” or “Round up every payment and put the difference in the fund.” The system will also let you set rules to always pay certain merchants with specific mechanisms (a debit card or a credit card, for example).