Even in cash-oriented Germany, the fear of viruses could pave the way for digital payment services such as PayPal.
Schulman also explains what the new management approach “Reverse Friedmanism” means for him.
Paypal’s chief executive, Dan Schulman, rarely comes into contact with cash anymore. In an interview with the “FAZ”, the manager explains that the online payment service provider now benefits extremely from the protective measures against the corona virus. Contactless payment is more in demand than ever.
Many older people are currently using services such as PayPal for the first time. Not only are they increasingly ordering on the Internet anyway, but even when they go shopping in the store, they often prefer Paypal to the classic credit card terminal at the till. Who wants to use the keyboard that hundreds of others have touched before, even if it is contactless?
An irreversible “fundamental change” is now taking place during the Corona crisis; digital payment services are changing from a “nice-to-have” to a “must-have”, says Schulman in the “FAZ”.
“Even the Germans, who were mostly cash-oriented, are moving towards digital payments,” he continues. With that he could possibly be right. According to the Bundesbank, around 70 percent of payments in Germany are still made in cash. But the trend has been clear for years: Germans are also paying less and less with cash. The pandemic could accelerate this trend.
Never before have so many transactions been processed via PayPal in one day as on May 1, 2020
Founded in 1998 by Peter Thiel, among others, under the name Confinity, the company merged shortly thereafter with one of Elon Musk’s early foundations. In 2012 it was sold to Ebay for 1.5 billion, and later split off. Today, PayPal is worth $ 170 billion and Ebay is worth $ 30 billion.
This rapid growth story does not seem to be over yet. By executing part of the transactions, PayPal always earns money from the growth of other large new economy companies such as the accommodation agent Airbnb or the transport service provider Uber.
The fact that these companies are now stumbling in times of the corona pandemic also has negative effects on PayPal. However, in contrast to most other companies, the crisis is also a huge opportunity for the payment service provider: From the company side, it was said that more new customers had been won in April than ever before and no more transactions were processed than on May 1.
Schulman, who switched from the American credit card company American Express to the executive chair of Paypal, has a vision of the future for his company. He calls it “Reverse Friedmanism”, in contrast to the economist Milton Friedman, who shaped the “shareholder value” ideal: As a result, the main task of management is to increase the value for shareholders.
The employees are the most important interest group
For Schulman, on the other hand, employees are the most important interest group: Most recently, he had significantly reduced the contributions of low-paid employees to social security. “We have to be a company with moral responsibility,” he explains his approach to the “FAZ”.
Schulman is considered one of the most prominent representatives of this new management approach. But he is increasingly finding imitators. The “Business roundtable”, an association of the most influential US managers, has recently committed itself to a similar approach: Management no longer serves the interests of shareholders, but also those of employees, suppliers and the environment.
Schulman is convinced: “I think that many more companies must clearly demonstrate that their purpose is not just to make money”. But maybe the Paypal manager has less to worry about than other companies. Schulman knows very well that digital payment services have long been a must-have for the coming generation.