Why Walmart And PayPal Are Tackling Inclusion Jointly

For 73 percent of Americans, participating in the digital economy is as easy as securing internet access and entering their relevant credit, debit or bank account numbers with the merchants and service providers they want to buy from and setting up their mobile banking app. After that, paying bills, sending money to another person, booking travel, and shopping with one click is a cinch.

But for 27 percent of American consumers who are unbanked or underbanked, according to the FDIC, things aren’t nearly as seamless. For those customers many of the digitally backed transactions that have simply become the inexpensive norm for most consumers – remains a friction-laden experience that can be costly in terms of both time and actual money.

The consumer base affected by these problems, PayPal CEO Dan Schulman noted in a Facebook Live broadcast with Walmart’s Daniel Eckert Senior Vice President of Services and Digital Acceleration, isn’t the stereotypical niche group most people tend to associate with the “unbanked” or “underbanked.”

This, he noted is the 90 million or so American consumers – who need to be better served.

The Facebook Live broadcast served as an announcement that the two – PayPal and Walmart – will team to bridge that gap with the launch of PayPal Cash at Walmart locations nationwide for PayPal account holders and PayPal Cash Mastercard customers.


The Importance of On-Ramps and Off-Ramps

The partnership will allow PayPal users to put cash into or take  cash out of their PayPal accounts or Cash Mastercard accounts at any Walmart customer service desk, ATM or cash register for a flat $3 fee.

That flat fee is central to the PayPal Cash value proposition and consistent with Walmart’s commitment to every low prices on all of the services offered thru Walmart. This model was “ripe for application to the provision of financial services,” Eckart noted. PayPal Cash and its everyday low priced flat fee, follows Walmart’s agreement with MoneyGram to provide flat fees on Walmart2World’s money transfer services, as well.

Loading cash into a PayPal account for use online – for shopping or for paying bills – is now immediately available at all approximate 4,500  Walmart stores (not counting Sam’s Club) nationwide. The PayPal cash out option will be available at all Walmart locations starting early next month.

The partnership, Schulman noted in his conversation, is a natural extension of PayPal’s ongoing efforts to make access to financial services something that every single consumer can participate in.  Other recent notable include its acquisition of Hyperwallet payments platform, or earlier this year, or its rollout of the PayPal Cash Mastercard line 2017.  The tactics and expansions change – but the goal remains the same, making it easier to digitize their funds – and to then access, manage and use those funds as needed digitally.

It’s a start, Schulman told Eckert – and a proof that technology can be of massive use in solving the issues the unbanked and underbanked face. But, he noted, on its own, it isn’t enough.

“Customers need off ramps from the digital economy as well as onramps.  You have to make it possible for customers to have the physical capability to take cash out where and when they need it,” Schulman noted. “You can’t ask people to put cash into a digital platform, but then make it difficult or impossible to take it out.”

Eckert agreed, noting that this is particularly true of the cash using population.  Digital and card payments have grown, he noted, and check payments are slowly fading away.  But cash payment remain stable – and even slowly growing – central part of a large sub-section of consumers payments lives.

And for good reason, he noted.  Cash is consistent, it always works and when stacked against a lot of the options the unbanked and underbanked face when they are looking at alternatives to cash, it is also the cheapest and easiest thing to use.  By opening up Walmart as the access point to both add cash in – or take cash out – they calculations become very different.

Cash usage in the U.S. according to the Global Cash Index has remained relatively steady in the states since 2003, ranging between 14.3 percent and 15.5 percent of the gross domestic product. According to the Index, nearly a quarter, 24 percent, of American consumer make all their purchases in cash. 

This is due to the size of the spending pie increasing in the U.S. even though the percentage of cash being used to transact at the physical store is declining.

The Power of Scale

With a Walmart within a 10 minute drive of 90 percent of the U.S. population, many of which are open 24 hours a day and nearly as many branches as the largest banks in the world, access to those services is more or less ubiquitous.

Combining that physical scale, with PayPal’s online merchant scale – now access to 20 million merchants worldwide, makes for “a very compelling marriage,” Schulman noted, and one that he says provides a real range of value for their joint customers.

Eckert said that what PayPal and Walmart can do jointly is much more than what we can do apart, adding that the future of financial inclusion isn’t going to be about one player coming up with a silver bullet solution for 90 million consumers, but about ecosystems working together and combining assets to serve their needs..

“We have to work on these issues for the wide range of consumers who are counting on companies like ours to come together and give them the kind of access they are lacking today,” Eckert noted.

PayPal Cash isn’t the first partnership that Schulman and Eckert have created. In 2012  when Schulman was at Amex, he and Eckert launched the Bluebird product which was designed as an alternative to debit and checking accounts designed to help consumers better manage and control their everyday finances.

BlueBird is still available through Walmart Money Centers today – and Schulman and Eckert’s latest pair-up is once again back at the drawing board – making sure that consumers all the power that goes with mainstream financial products, even if their point of entry for those products is a bit different.