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PayPal Moves Into Robo-Investing With Acorns

Raymond Pucci by Raymond Pucci
November 22, 2017
in Recent News
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While not intended for squirrels, PayPal just announced a partnership with robo-investment firm Acorns. As the following article explains, PayPal is offering its customers a new financial service.

PayPal CEO Dan Schulman has been working hard on expansion since spinning the popular online payments service off from parent eBay two years ago. Last week’s deal to get consumer loans off PayPal’s own balance sheet was an effort to free up billions of dollars in capital for more productive uses, such as investments and acquisitions that could expand the company beyond the web commerce niche it dominates.

Now, in perhaps a mobile app-oriented twist on the old financial services upsell pitch, Schulman is integrating a new way for users to move their money around in the PayPal app. In a deal with the startup Acorns, PayPal is adding the ability to put money in Acorns’ low-cost, automatic investing portfolios. After leading a $30 million investment round in the startup last year, PayPal already lets its app users link their accounts to Acorns to use the investment firm’s rounding up savings feature.

Under that existing connection, a PayPal user can have purchase transactions “rounded up” to the nearest whole dollar amount and the extra bit gets deposited in their Acorns account. With the new, deeper integration, PayPal users will be able to use PayPal to fund an investment account with Acorns, view and supplement their Acorns balances, set up recurring investments, and jump over to the startup’s site to manage their balances with one click. There’s no link to Venmo yet, but that’s an obvious expansion that could come in the future.

PayPal continues to expand beyond the commoditized payments transaction market. They have been lending working capital to small businesses. Now they are offering their 200 million plus consumer users access to financial management. These services bring stickier relationships to PayPal’s base and provides a way to differentiate their value in the payments marketplace. While not something for everyone, robo-investing and its passive portfolio management approach has attracted wider appeal in recent years, especially to consumers looking for a simple system on a mobile app.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

Read the full story here

Tags: AcornPayPal
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