‘The Best Payment System Is The One You Don’t Even Notice’: PayPal Speaks (Interview)
John Lunn is the Global Director of the PayPal Developer Network and has been with the company for nearly seven years now. He was in fact the fourth employee of PayPal UK, and being that he's been in the payment industry "pretty much since it started in 1997," he knows a thing or two about everything from how to build up a support team for a company such as PayPal to how to work with developers globally.
We spoke with Lunn about his thoughts on the value of PayPal, how PayPal is now moving into the "physical world," how or why PayPal may continue to vet who it works with and where BitCoin may or may not be going in the future.
iTech Post: As Global Director of the Developer Network for PayPal, what exactly is your function within the company?
JOHN LUNN: My current role is I run the PayPal Developer Network. So I look after PayPal's relations with developers, promoting PayPal APIs and tools to them. My role also works the other way, in that I work with developers to get from PayPal what they need. I kind of sit between developers and PayPal, translating their needs back to them and vice versa.
iTech Post: What would you say is the inherent value of PayPal?
JL: Before PayPal, as a merchant, to be able to trade or sell anything online, you'd have to go to a bank, and they'd give you a business account. And that would take you through quite a lengthy process. A lot of paperwork: Prove that you're credit worthy, prove that you have a business model. Once you did all that, you'd have to go find a payment processor who would provide the services to connect your website to your bank.
That whole process was not only lengthy, but it was particularly painful for a lot of very small retailers who essentially couldn't get online because they had no trading history, so the banks would say they didn't understand what they were doing and would just say, "No."
iTech Post: How did PayPal disrupt this process?
JL: What PayPal did was it solved that problem. It connected buyers and sellers in a very, very simple way. It basically made it very safe for the buyer to buy from the seller because they didn't have to provide their financial details to the seller. And it also made it very quick for the seller to sign up, get the ability to process and take money online. It took a lot of the friction out of the payment system that existed then.
iTech Post: When we spoke with Amazon a few weeks back, our source told us that the "trust factor" was a big component to the company's success. How did PayPal gain the trust of consumers and sellers alike to become a kind of gold standard in the industry?
JL: When you go to a website, perhaps you don't know that website or you don't trust that website. You're often hesitant to put in your card information or your banking information. What PayPal does is it masks that from the person doing the selling. For the consumer, you know you can trust PayPal with your financial information and you know that when you buy from an unknown third party that PayPal won't share your information with that third party. Basically, you're not sharing your important financial details with others.
iTech Post: How did PayPal develop into the titan it's become?
JL: PayPal really got here sort of through eBay. PayPal became one of the main ways to buy and sell on eBay. As we've done that, we've grown and grown and grown. And most people have bought or sold something on eBay and are familiar with PayPal as a trusted way to do that.
iTech Post: How does PayPal further work as a disruptive company?
JL: We completely disrupted the whole way that people bought and sold online. You could go today, set yourself up with a PayPal account and you could be selling in hundreds of different countries throughout the world an hour later. You have the ability to do multicurrency transactions, sell to people who couldn't buy from you before in the currency they choose ...
iTech Post: But how exactly is this disruptive?
JL: We basically opened up the ability for the small seller or individual even to sell things online. And that disrupted everything, frankly. Before, you only bought things from stores or large entities that had that presence online. Now anyone can sell online or buy online. So it was complete disruption the way buying and selling works.
iTech Post: Can you discuss how your new APIs are being integrated into PayPal's functionality?
JL: The first thing that we've done recently is we've basically looked at the technology that we've been using and the way that developers worked with PayPal. We realized, frankly, that our technology was getting out of date. What we did is we went to our developer community and we said, "What APIs, what tools, what technology would you like to use to work with PayPal?" We took their feedback and actually that's what we built.
iTech Post: And what did you do with that feedback?
JL: We re-launched the APIs and the way you work with us from a developer perspective. Essentially, we launched a new site, we launched new APIs, we launched new documentation, we moved all of our forums etc. onto open source. We've put all of our documentation and code onto GitHub so people are able to use the tools that developers want to use today. That's the first thing that we've done.
iTech Post: What else has PayPal been doing recently in order to continue developing?
JL: [eBay CEO] John [Donahoe] was talking [at TechCrunch Disrupt NY 2013] about PayPal moving into the "real world." PayPal has traditionally been known as an online player. And that's changing now with PayPal moving into the physical world with the ability for people to buy and sell things physically in a face-to-face environment.
iTech Post: How is this happening?
JL: We've got the PayPal Here devices, the chip and PIN devices in Europe and the ability to check in as well. You can drop in a PIN into a local retailer and what that does is that retailer can then see your face on their POS so when you walk in to buy your item, you can say you're buying your item with PayPal and they can see your face on their till, and can verify it's you and then you can walk out.
iTech Post: How does this disrupt the overall buying experience?
JL: I no longer need to hand over a card or any of those things. I can basically walk in and walk out simply by looking at the shopper system and say I want to pay by PayPal. The aim there, again, is we want to disrupt the physical world. We want to bring all the good stuff we've learned online and bring that into a physical world.
iTech Post: Are we going to be getting to the point where there won't be any cash or credit cards at all?
JL: There always needs to be choice. People like to choose. Different countries have different laws around privacy, for instance. Different individuals have different choices around privacy, too. It does come down to consumer choice, but it will change the way that you buy and sell things. I can walk into a store, I don't have to get my wallet out, the storeowner can get me what I like or don't like because I've checked in and provided some details before I've arrived; that will give me a better shopping experience.
However, if I don't want to participate, then I'm just going to have the same shopping experience I have today. We always give a consumer choice, but hopefully the benefits you get from sharing your data -- and it's important people realize their data is valuable -- is going to make a difference in how much information I share with a retailer.
iTech Post: Where does PayPal go to bring in developers to work with you on these APIs and other new technological developments?
JL: We have over 140,000 developers registered on the PayPal Developer Network. These are developers who registered to get more information about what PayPal is doing and are willing to converse with us about how PayPal works and get more information about APIs, etc. We're also doing over 100 different trade shows this year. So we're going to different events to go to basically where developers are and sit down with them and talk to them and openly doing that.
In the case of the new APIs, we asked for volunteers in the developer community to come in and sit with us for a couple of days and play with our APIs before we released them and tell us what worked, what didn't work and where we should improve them. We did that a number of times to make sure we got things right before we released them.
iTech Post: How else are you working with developers at this point?
JL: Our APIs are still in Beta, so we're still constantly getting feedback through our forums, through emails, through direct contact on things we can do better or need improving. We've basically opened up and said, "Please tell us what works." We've gone away from the old software model of here's a product, it's in a box, open the box, install it, that's your product, to a much more open environment. We're basically conversing with our community about what works.
iTech Post: Can anyone get involved in this?
JL: Simply go onto the website which is developer.paypal.com. If you sign up there for a developer account, which you can do through the website, you will instantly be asked if you want to join our newsgroup and our community. Or you can follow us on Twitter, which is PayPalDev. We have a very active Twitter community. Or you can simply email us at developer.paypal.com.
And as I said earlier, we are going to be at shows all over the world. If you see PayPal, please come and talk with us. We'd love to get you into our community.
iTech Post: What have the reactions been to the new PayPal APIs?
JL: We actually launched the APIs at SXSW [early March 2013]. We were very, very happy with the response. I would say that the best way to put it is there was a general sigh of relief from the developer community [laughs]. Finally PayPal had updated and moved to a modern and cutting edge level of API. The feedback we've gotten is great. We actually haven't gotten any negative feedback at all, I'd say. What the community is saying to us is, "Please do more of this." So that's what we're pushing ahead with.
iTech Post: Switching gears a bit, what is PayPal's take on BitCoin?
JL: It's very interesting. As a payment and techie geek, I find it fascinating. As a company, we're always looking at what could be potentially disruptive. And BitCoin has the potential to be very disruptive. But it's very, very early in the life of BitCoin. You've seen recently three big flucuations in how much a BitCoin is worth. As a company that's on a disruptive edge, of course we're going to pay attention to BitCoin. And that's what we're doing: We're looking and watching at how BitCoin is progressing in its early days.
iTech Post: It's interesting to think about BitCoin or PayPal or even things like the Euro as far as centralizing currency in a way. How does PayPal work with so many different global communities and societies that have completely different currencies and even cultural takes on such things as technology or money itself?
JL: PayPal isn't a currency itself. At the moment, behind every balance that you have, there's a real currency. And that fluctuates with the exchange rates. We have teams whose role is to monitor exchange rates. But also the other thing is, culturally where PayPal really, really helps the seller: If you look at different countries, not every country uses credit cards. In certain countries like Germany, credit cards are a minority of transactions. Over half of Germans don't own a credit card. If you are a seller and the only way you're going to accept payments in Germany is through a credit card, you're in big trouble. So PayPal is constantly looking at how the local people like to pay. What we do when we go into a country is we firstly make sure we're within regulation and all that kind of stuff. The second thing we do is we look at how the locals like to pay and make sure that PayPal is able to work in that way.
iTech Post: How are you meanwhile continuing your relationship with eBay and selfsame online retailers?
JL: eBay is our parent company. PayPal is the payment system for eBay. So we have a very strong relationship. We're constantly working on better ways for PayPal and eBay to work together. Some of things we've done lately with an enhanced PayPal checkout on eBay has just made it incredibly easy for you to check out when you're checking out on eBay.
iTech Post: What is PayPal's take on competition from the likes of Dwolla?
JL: PayPal's been around a little bit of time. [laughs] Every year, we get new competitors. Firstly, we love them, because they bring new ideas. PayPal needs to evolve and grow, which is always good. Having competition is a great thing. Secondly, what PayPal does well and has always done well is we balance what the consumer wants, what the merchant wants and the risk involved. So any payment type that comes along anywhere in the world, the consumer is going to need to want to use it, the merchant is going to need to want to accept it and then the risk levels in the middle means no one gets defrauded or loses money over it. Balancing those three things is a very hard thing to do.
More competitors come and go, and more have gone than have come recently. As they move into the market, they need to make sure they meet those three criteria: Consumer, merchant and risk.
iTech Post: When you spoke before about open source and taking in feedback, I was curious about PayPal's filtration process. There has been some controversy over the years about PayPal not working with online booksellers that allegedly sell "pornographic" material or people who might want to donate to WikiLeaks, say.
JL: The terms and conditions of which businesses we will and will not work with are on the "Terms and Conditions" when you sign up with a PayPal account. That is constantly being reviewed and monitored. PayPal in UK and Europe is able to work with bookkeepers. People taking online bets, because that is legal in those markets. When I started at PayPal, PayPal didn't accept online gambling from European betting companies. We looked at that, we looked at the business, we looked at the risk and made sure first of all it was legal and, two, that it was relevant in the market.
So we are constantly looking at and changing our "Terms and Conditions" and looking at what markets we maybe we weren't working in before and want to work in now or the other way around: Markets where we were accepting payments before and in PayPal's view, it's become a high-risk market or there's something unethical about it.
iTech Post: Will PayPal ever break away from eBay in order to become more of an independent entity?
JL: PayPal is a payment system all over the world and not just for eBay. We're a commercial entity. We're in the business of powering payments wherever we go. There's no restriction from eBay. eBay won't turn to us and say, "No you can't do that." PayPal essentially is a standalone business. We're owned by eBay, but we're powering payments with companies that technically compete with eBay. But at the same time, they're our best client and also our parent and we have a special relationship.
iTech Post: Do you have anything else to add, John?
JL: Just watch the space here. This is the first set of APIs we've launched. We plan on launching many more throughout the year and enhancing what we've done.
The other important thing any developer or merchant out there who's looking at selling online needs to be seriously looking at mobile. The ability to sell on a cell phone is increasing. Relevance is increasing. At the same time we're launching our new APIs, we've also launched a new set of mobile SDKs for iPhone. Essentially as a consumer, this means you can either check out with PayPal or hold your phone over your credit card. It then records an image of your card and processes that credit card transaction. So no need for you to type in your credit card number. We believe we have the best mobile checkout system in the industry.
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