Most digital payments take place in the virtual world, PayPal is making a big move into the real world.
The well-known payment brand, which brought in a whopping $15 billion in revenue is looking to up its ante this holiday season with a huge store on New York's 5th Avenue. The famed stretch of street features St. Patrick's Cathedral, the Rockefeller Center Christmas tree and Saks Fifth Avenue's famed holiday windows all of which generated more than half a million visitors last year according to social media data analyzed by Thinknum.
When asked about the West 44th Street corner location, PayPal would only say that this Christmas "it’s “going big for small business this holiday by bringing thoughtfully made gifts from impactful small businesses to the shopping capital of New York. Watch this space,” a spokesperson told FOX Business. “More will be unveiled in the coming weeks.”
Though it is not fully clear what the store will offer, it comes at the right time. Americans are expected to spend up to $730 billion on the holidays this year, data from the National Retail Federation show. That’s up 4 percent from 2018 and more than $1,000 per person.
PayPal’s new store, located on the city’s iconic Fifth Avenue, will fall right in the middle of the commotion, standing in close proximity to flagship brands like Gucci, Adidas, Tommy Bahama and Tiffany’s. This store -- which will serve as a huge advertisement for PayPal -- comes as the company is facing competition from all sides.
The digital-pay market is expected to grow, hitting more than $7 trillion in sales by 2024, according to data firm Mordor Intelligence and major players are trying to get ahead with consumers. Mega-banks JPMorgan Chase, Bank of America, BB&T, Capital One, PNC Bank, US Bank, Citibank and Wells Fargo have teamed up to create Zelle. Cash App is a mobile payment service developed by Square which takes care of personal payments and merchant payments respectively. Google Pay and Apple Pay are products from two tech giants and this week, Facebook said it would enter the arena with Facebook Pay. Pay Pal also owns peer-to-peer pay app Venmo, which processed $27 billion in third-quarter 2019, or 64 percent year over year. Its partnership with MasterCard could boost Pay Pal as well as more brick-and-mortar stores go digital.
All these services have appeal according to one digital payment expert. “Many consumers view credit cards, debit cards, mobile payments and other cashless payment methods as faster and more convenient than paying with cash,” Ted Rossman, an industry analyst at CreditCards.com, told FOX Business. “With these approaches, there’s no need to fumble with bills and coins and no need to reload your wallet at the ATM, which can carry hefty fees of about $5 for each out-of-network transaction.”
One-third of Americans make no cash payments in a normal week, according to data from the Pew Research Center, which surveyed 13,000 people. U.S. Bank found that 50 percent of the 2,000 U.S. adults they polled only carry about half the time they’re out.
The opening of a major brick and mortar storefront on 5th Avenue for the holidays looks to cash in on prime spending season. The average household in the Big Apple spent nearly $2,000 over holidays last year, a survey from the financial group Deloitte points out. In a separate study from software firm Womply, which looked at retailers’ transactions nationwide, researchers found that New York State ranked No. 1 among all 50 states in total sales volume during the same time.
The company does have some experience in the New York shopping market. PayPal opened a pop-up store in 2011 in lower Manhattan showcasing new tools and technologies. Last year, in the summer, it opened another promotional spot in the city to educate customers on credit card rewards points.
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Its latest move could attempt the same, garnering more eyes and, potentially, new users. And the company has been trending upward: Its stock is up nearly 20 percent on the year.
Still, a journey to the top won’t be easy.
The one hurdle that faces all these outlets is protecting consumers vital information PayPal, in 2017, revealed its subsidiary TIO Networks was hacked, compromising private data of 1 million customers. Zelle, said hackers stole between $190 to $6,400 from their accounts in June. And Facebook, now looking to get into the payment game, remains in the hot seat from the public after multiple privacy breaches.