PayPal Pushes into In-person Payments with Cashback Rewards, Apple Integration

The PayPal logo is seen at a high-tech park in Beersheba, southern Israel August 28, 2017. (Reuters)
The PayPal logo is seen at a high-tech park in Beersheba, southern Israel August 28, 2017. (Reuters)
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PayPal Pushes into In-person Payments with Cashback Rewards, Apple Integration

The PayPal logo is seen at a high-tech park in Beersheba, southern Israel August 28, 2017. (Reuters)
The PayPal logo is seen at a high-tech park in Beersheba, southern Israel August 28, 2017. (Reuters)

PayPal is expanding into US point-of-sale payments by integrating its debit card with Apple's mobile wallet and offering cashback rewards, as the global online payments giant seeks direct competition with tech companies and banks.

The bid to grab a slice of in-person purchases at stores, cafes and restaurants is part of an ambitious turnaround strategy by new CEO Alex Chriss who joined the company from Intuit last year.

While PayPal has long dominated online payments and peer-to-peer payments via its Venmo app, it has not pushed consumers to use its products in person, Reuters reported.

"E-commerce has obviously been one of the fastest growing areas where people are spending their dollars... but it's not everything," Chriss said. "Now consumers can use PayPal for every purchase, everywhere, every time."

The push into point-of-sales includes 5% cash back for certain products up to $1,000 per month and additional rewards from brands like DoorDash and Sephora.

The value of US debit card payments has jumped in recent years, reaching $4.55 trillion in 2021 up from $2.47 trillion in 2015, according to recent US Federal Reserve data.

Chriss said consumers are becoming increasingly cost-conscious and moving towards debit cards, which allow them to keep within their spending limits.

PayPal will also allow customers to use debit cards with Apple Pay, as users take advantage of mobile wallets and "tap to pay" options.

That makes it among the more competitive debit card cash-back products with only 24% of debit cardholders reporting earning cash-back rewards in 2023, compared with 74% of credit cardholders, a report from purchase rewards firm Valuedynamx showed.

While PayPal has enjoyed a long-held first mover advantage, increasing competition from Apple and Google have taken some share in mobile payments, according to analysts.

As part of the push, the company is making its largest-ever marketing investment to promote using PayPal in person. PayPal declined to disclose amount of that investment, but flagged in its quarterly earnings that marketing and brand campaigns would push up expenses in the second half of the year.

Chriss has called 2024 a "transition year" for PayPal, and has promised to grow revenues beyond transaction-related volume. In January, PayPal launched artificial intelligence-driven products and a one-click checkout feature.

PayPal's stock price is up more than 17% since the beginning of the year, but still trails benchmark S&P 500 index's 22% gain.



Big Tech on a Quest for Ideal AI Device

Former Apple design chief Jony Ive (L) has joined forces with OpenAI to make a device ideal for engaging with generative artificial intelligence. Matt Winkelmeyer / GETTY IMAGES NORTH AMERICA/AFP
Former Apple design chief Jony Ive (L) has joined forces with OpenAI to make a device ideal for engaging with generative artificial intelligence. Matt Winkelmeyer / GETTY IMAGES NORTH AMERICA/AFP
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Big Tech on a Quest for Ideal AI Device

Former Apple design chief Jony Ive (L) has joined forces with OpenAI to make a device ideal for engaging with generative artificial intelligence. Matt Winkelmeyer / GETTY IMAGES NORTH AMERICA/AFP
Former Apple design chief Jony Ive (L) has joined forces with OpenAI to make a device ideal for engaging with generative artificial intelligence. Matt Winkelmeyer / GETTY IMAGES NORTH AMERICA/AFP

ChatGPT-maker OpenAI has enlisted the legendary designer behind the iPhone to create an irresistible gadget for using generative artificial intelligence (AI).

The ability to engage digital assistants as easily as speaking with friends is being built into eyewear, speakers, computers and smartphones, but some argue that the Age of AI calls for a transformational new gizmo.

"The products that we're using to deliver and connect us to unimaginable technology are decades old," former Apple chief design officer Jony Ive said when his alliance with OpenAI was announced.

"It's just common sense to at least think, surely there's something beyond these legacy products."

Sharing no details, OpenAI chief executive Sam Altman said that a prototype Ive shared with him "is the coolest piece of technology that the world will have ever seen."

According to several US media outlets, the device won't have a screen, nor will it be worn like a watch or broach.

Kyle Li, a professor at The New School, said that since AI is not yet integrated into people's lives, there is room for a new product tailored to its use.

The type of device won't be as important as whether the AI innovators like OpenAI make "pro-human" choices when building the software that will power them, said Rob Howard of consulting firm Innovating with AI

Learning from flops

The industry is well aware of the spectacular failure of the AI Pin, a square gadget worn like a badge packed with AI features but gone from the market less than a year after its debut in 2024 due to a dearth of buyers.

The AI Pin marketed by startup Humane to incredible buzz was priced at $699.

Now, Meta and OpenAI are making "big bets" on AI-infused hardware, according to CCS Insight analyst Ben Wood.

OpenAI made a multi-billion-dollar deal to bring Ive's startup into the fold.

Google announced early this year it is working on mixed-reality glasses with AI smarts, while Amazon continues to ramp up Alexa digital assistant capabilities in its Echo speakers and displays.

Apple is being cautious embracing generative AI, slowly integrating it into iPhones even as rivals race ahead with the technology. Plans to soup up its Siri chatbot with generative AI have been indefinitely delayed.

The quest for creating an AI interface that people love "is something Apple should have jumped on a long time ago," said Futurum research director Olivier Blanchard.

Time to talk

Blanchard envisions some kind of hub that lets users tap into AI, most likely by speaking to it and without being connected to the internet.

"You can't push it all out in the cloud," Blanchard said, citing concerns about reliability, security, cost, and harm to the environment due to energy demand.

"There is not enough energy in the world to do this, so we need to find local solutions," he added.

Howard expects a fierce battle over what will be the must-have personal device for AI, since the number of things someone is willing to wear is limited and "people can feel overwhelmed."

A new piece of hardware devoted to AI isn't the obvious solution, but OpenAI has the funding and the talent to deliver, according to Julien Codorniou, a partner at venture capital firm 20VC and a former Facebook executive.

OpenAI recently hired former Facebook executive and Instacart chief Fidji Simo as head of applications, and her job will be to help answer the hardware question.

Voice is expected by many to be a primary way people command AI.

Google chief Sundar Pichai has long expressed a vision of "ambient computing" in which technology blends invisibly into the world, waiting to be called upon.

"There's no longer any reason to type or touch if you can speak instead," Blanchard said.

"Generative AI wants to be increasingly human" so spoken dialogues with the technology "make sense," he added.

However, smartphones are too embedded in people's lives to be snubbed any time soon, said Wood.