PayPal boosts competitive advantage with slew of new SMB features, including Apple Pay integration

The news: PayPal introduced four new features for small and medium-sized businesses (SMBs), per a press release.

• PayPal added Apple Pay as a payment option for Advanced Checkout, which offers more payment features and personalization than its standard checkout solution.
• Customers can save their cards to a specific merchant’s site for faster checkout. They won’t need a PayPal account to use the feature.
• PayPal added support for a real-time account updater and network token, which will let it automatically update account details for lost or stolen cards that are reissued.
• The company also introduced an interchange++ (IC++) pricing model for SMBs. Previously, PayPal charged a flat fee for Advanced Checkout, but IC++ can be a good alternative for medium-sized businesses with higher sales volume, Nitin Prabhu, PayPal’s VP of Merchant Experiences and Payment Solutions told TechCrunch.

The opportunity: PayPal’s new features can help it in three ways.

1. They can help improve the customer experience. Even though Apple Pay competes with PayPal’s own buy button, adding the popular payment method gives customers increased checkout convenience. Forty-four percent of US consumers said they preferred shopping from retailers that offered multiple payment options, per Jungle Scout. Enhancing the customer experience can lead to repeat purchases, which benefits both merchants and PayPal.
2. The features can also boost conversion. Letting customers save their card information and automatically updating account details for reissued cards helps reduce checkout friction, which can support higher conversion rates.
3. They can also help PayPal compete more aggressively. The online checkout space is getting more competitive as new entrants enter the fold. For example, last year Amazon introduced Buy with Prime and Block expanded Cash App Pay beyond the Square ecosystem. By introducing enhanced features, PayPal can drown out noise from rivals and maintain its checkout dominance.

Why it’s worth watching: The enhancements align with PayPal’s push to invest in “high-conviction projects.”

These projects include passwordless checkout, one-click in-app experiences, and supporting advanced checkout flows with data and AI capabilities, all of which CEO Dan Schulman highlighted during the firm’s Q4 earnings call. PayPal recently underwent a cost restructuring—including layoffs—to free up funds for high-potential growth initiatives, even as the firm takes a more cautious approach to spending in 2023.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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