Problems sit at the core of modern day market dynamics, according to Dan Schulman, president and CEO of PayPal.
“It is broken in certain areas… When I look inside PayPal. As a Silicon Valley company we pay very well. We pay very competitively. We look at every single location, every single job title, and we pay either at or above market rate,” he told an audience at Money 2020 in Las Vegas.
“Even though we pay competitively – and usually above the market – the fact of the matter is that for a large part of the population inside PayPal, they mirror the general population in that they struggle to make ends meet at the end of the month. That’s just not acceptable for a company like PayPal,” he said.
“Expenses are rising. We tend to try to be more cost efficient but I think where we need to be more cost efficient in areas where technology will allow us to do so.”
“Every one of us depends on a healthy economy and a healthy consumer and I honestly believe that we can create an upward spiral as opposed to a downward spiral by investing in our employees and doing something meaning.
“70 percent of the population is struggling to make ends meet – that’s in the US which is a very developed market. If you look across the world the problem is a lot worse.”
Schulman spoke of a new middle class in the US, that is finding it difficult to get by.
“If you’re struggling to make ends meet at the end of the month… If your kids aren’t going to have a better life than you are… you think about what’s gone wrong in the system and you start to agitate that the system isn’t working for you any more. I think financial health – financial wellness - is foundational to making democracy work and combating the rise of populism. Technology, the explosion of the mobile phone is the digitisation of money. There’s a solution contained in that to help people.
“The markets are not working for them any more. It’s as simple as that. Why are 70 percent of people in the US struggling to make ends meet?”
Schulman rejected the idea that consumers are exposed to too much debt and extending credit facilities too much.
PayPal Working Capital is based on the loan applicant’s PayPal sales history instead of standard credit checks. Loans are capped at $200,000 for first time applicants or 35 percent of PayPal sales. Applicants must repay a minimum of five or 10 percent every 90 days to keep the loan “in good standing” according to the company’s website.
For Schulman, helping firms free up capital is good for the economy, and the organisation has targeted specific areas to do so.
“We’re probably one of the top five providers of working capital in the US now. We do well over $1bn of working capital loans every quarter. 70 percent of those loans go to areas that have had disproportional numbers of banks close, that are in low and medium income neighbourhoods that don’t have access to working capital.”