PayPal has partnered with Spanish lender la Caixa to
integrate its Instant Account Creation solution with the lender’s
online banking platform. PayPal’s director general in Spain and
Portugal, Estanis Martin de Nicolas, tells Meghna Mukerjee how the
integration provides la Caixa customers with convenience and PayPal
with a new customer acquisition channel.
Go deeper with GlobalData
It is
a first, and according to PayPal, a first among many.
PayPal has partnered with la Caixa – Spain’s
largest lender by branches – to integrate its Instant Account
Creation solution with la Caixa’s online banking platform.
This is the first time that PayPal has integrated its account
opening services with any banking platform.
Instant Account Creation allows la Caixa customers to open a new
PayPal account in just three steps from the internet channel.
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By GlobalDataIt also allows la Caixa to ensure that its credit and debit
cards are instantly added to the customer’s new PayPal wallet.
The partnership was officially launched at the
end of November 2011. By the middle of February, approximately
10,000 customers opened PayPal accounts through la Caixa.
Due to the integration, customers are not
required to fill out any additional information to create a PayPal
account through la Caixa’s online bank, beyond choosing an email
address and password.
PayPal’s director general in Spain and
Portugal, Estanis Martin de Nicolas, says that besides providing
“great efficiency”, the integrated platform is a new customer
acquisition channel for PayPal.
“Someone who logs in to la Caixa’s online
banking can initiate the process of opening a PayPal account, link
their la Caixa accounts to it, and it shows them the credit cards
they have on file with la Caixa.
“Customers can choose the cards they want to
associate with the PayPal account, accept the terms and conditions,
and they are sent to a mini-browser on PayPal where they put in a
password and that is it. The PayPal account is fully functional
with cards attached to it,” explains Nicolas.
According to Nicolas, the process of adding
and verifying cards while creating a new PayPal account can be
“clunky and time consuming” and the partnership gives la Caixa
customers a “wonderful first experience with PayPal”.
“We have
a big drop in numbers when customers want to add a credit card and
do not manage to add it. I do not think any financial institution
has a process that does not require customers to give their names,
dates of birth, addresses – but we do not need to make customers
repeat the process with la Caixa. It is all integrated and already
available.”
Additionally, when customers open PayPal
accounts through la Caixa, their financial details are not “flying
around the internet every time they make a purchase”.
“Over the internet you need to fill out long
forms and we know that is a huge pain for online shoppers. It does
not happen on the high street but it is what a lot of merchants are
doing online,” says Nicolas.
PayPal is in talks with other lenders in
Europe and North America as well to initiate similar
partnerships.
“We wanted to start with la Caixa. We will see
several other banks integrated by the end of the year,” says
Nicolas.
In Spain’s banking space, la Caixa enjoys over
40% online banking penetration and approximately 50% mobile banking
penetration, having “pushed really hard to be way ahead of the
other players”, explains Nicolas.
Director of the cards business at la Caixa, Juan Morla Tomas,
says:
“There is no doubt that our industry is in constant evolution.
For la Caixa, providing the best service to our customers is of
paramount importance, and that is why we have partnered with
PayPal.
“The Instant Account Creation solution allows us to offer a
value added product. And if we keep customers and innovation at the
heart of what we do, the business results will follow.”
“The more cool, innovative, useful products
and services la Caixa brings to its online bank, the more the users
will use the online bank, and the less they will go to branches
that are a lot more expensive. So that is one of the incentives,”
says Nicolas.
Nicolas says, the other incentive for la Caixa
is receiving an acquiring fee from PayPal every time a la Caixa
card is used to make a purchase.
E-commerce is growing between 15% and 18%
annually in Spain and Portugal – the fastest growth rate in Western
Europe – and PayPal has approximately 1.7m active customers in the
region.
Also, an integrated platform between la Caixa
and PayPal offers customers in Spain – who are still wary of
security frauds online – a safer way to make payments.
“One peculiarity of the Spanish market is that
20% of the e-commerce transactions are paid with cash on delivery,
which is insane. The convenience of buying online is completely
destroyed if you have to wait at home for hours with a pile of cash
to pay for it.
“People in general feel that is a safer way to
pay but actually it is a lot less safe than paying through an
electronic payment method like PayPal,” says Nicolas.
For la Caixa, the new partnership is of
interest as it allows the lender to bring more of its customers on
to the online banking platform.
PayPal does not face much competition in the
Spanish market, but the big challenge is to get consumers in Spain
more engaged and active with e-commerce alongside improving the
efficiency and logistics of payments.
PayPal is in the process of integrating
another P2P money transfer service – Send Money – with banks across
Europe. The Send Money solution is already integrated with several
banking platforms in the US, and Discover Card is the “biggest case
study” so far.
“You can transfer money instantly to an email
address or phone number, and that is all you need. It is a complete
departure from traditional transfers. You don’t walk around with
the bank account details of all your friends and family members but
you do have their phone number and email addresses,” says
Nicolas.
In the past banks have seen PayPal as
competition, but Nicolas says there is a lot more opportunity for
collaborations that can “benefit both sides in the vast majority of
the banking business”.
“Some of the senior executives in the most traditional banks are
still wary about PayPal. They are struggling with finding ways of
collaboration. But others would love to follow what la Caixa is
doing and get onboard,” adds Nicolas.
