These are huge segments of the population, and if we can reimagine the ways in which they manage money and find new ways to help them save, we can make their lives better and also create business opportunities. Two-thirds of Americans live from paycheck to paycheck. Data from the Federal Reserve shows that 47% of Americans could not raise $400 in case of an emergency-say, a car repair in order to get to work-within a month’s time. PayPal is best known as a payment method for people making purchases on e-commerce websites, and that remains a vibrant part of our business-but we’re also aggressively expanding to become a software platform for a variety of financial transactions. Since I joined PayPal as its chief executive, in 2014, this awareness of how difficult it is for less-affluent people to manage and move money has energized our strategy. We came away with a newfound appreciation for how costly it is to be poor, which helped drive our work at American Express to create new payment systems for people without access to traditional banks. Managing finances this way can feel like a part-time job because of all the time spent in lines, and it’s very expensive-the fees are extremely high. We went to retail establishments to pay utility bills with cash. We stood in line at storefront check-cashing places, which are often in dangerous parts of the city. High Costs for the PoorĪ few years later, when I was leading a division at American Express, I joined my leadership team in a variation on that experiment: We had to spend an entire day paying bills and moving money using methods available to people without bank accounts or credit cards. I lived like that for only 24 hours, which of course is nothing-and it was during the summer, so the weather wasn’t terrible-but it was enough to give me a large dose of empathy for people who have to live on the street. We spent a lot of time trying to find a safe place to sleep-we kept getting kicked out of places, and eventually we ended up in a skateboard park. Most people looked right past me, as if I were invisible. We panhandled, and I wasn’t very good at it-it took me six hours to solicit enough money to buy a little food. It was one of those experiences you never forget. Virgin had been supporting a charity for homeless youth, and during an employee event someone from the charity told us that the only way we could learn about the importance of its work was to experience the lives of the people it was serving. Within those two segments, the company has created or acquired a suite of products that target different markets, including Venmo for Millennials, Xoom for international digital payments, and PayPal Working Capital, which lends money to small businesses.Ībout a decade ago, when I was the CEO of Virgin Mobile, a colleague and I accepted an unusual challenge: Spend 24 hours living on the street in New York City as a homeless person would, with no money or credit cards, no cell phones, and just the clothes on our backs. For consumers, it would empower underserved citizens throughout the world to make more-secure, faster, easier, and less-expensive financial transactions. For merchants, PayPal would evolve its technology platform to enable more-intimate relationships with customers using mobile and software. That strategy was to be a “customer champion” company and reorganize into just two groups: merchants and consumers. Those experiences increased his empathy for less-affluent people and his awareness of how difficult it is for them to manage and move money-and energized PayPal’s new strategy after Schulman joined the company as CEO, in 2014. A few years later, when he was head of a division at American Express, he joined his leadership team in a variation on that experiment: They would spend an entire day trying to pay bills and transfer money the way people without bank accounts or credit cards have to. Back when the author was the CEO of Virgin Mobile, he accepted a challenge to live like a homeless person for 24 hours in New York City-with no money or credit card, no cell phone, just the clothes on his back.
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