PayPal sees a rise in ‘silver tech’ as older generations test digital payments

PayPal is attracting a new demographic during stay-at-home shutdowns: what it calls “silver tech.”

The company has seen an older audience flock to digital payments as cash is seen as a germ risk and people across the U.S. stay at home to avoid spreading Covid-19. People over 50 were the company’s fastest growing segment from March to April, according to PayPal. 

This cohort of “silver tech” helped PayPal’s total payment volume recover back to “pre-Covid” levels, CFO John Rainey said at the J.P. Morgan Global Technology, Media and Communications Conference last week. 

“We think that these are some sustainable trends in our business,” Rainey said at the annual event, which took place over video conferencing this year.

The demographic shift happened as many were forced to experiment with online shopping, or looked to pay friends or family members. The boost in payment volume was also thanks to the larger purchase sizes by that demographic, according to Rainey. 

E-commerce more broadly has seen a boost from the Covid-era shutdowns. Mastercard and Visa both reported a more-than 40% jump in e-commerce in their second quarter results. Visa, meanwhile, saw an increase in first-time shoppers internationally. In Latin America, two out of ten card users paying for something online were doing so for the first time, Visa told CNBC. 

The demographic shift was across PayPal broadly — which includes PayPal Checkout and the company’s peer-to-peer payment app, Venmo. PayPal did not break out the growth in PayPal vs. Venmo with the older generation. But PayPal Checkout is much larger than Venmo, and exists on 80% of the top 500 online retail sites, according to MoffettNathanson. 

Venmo in particular stands to benefit from a new audience. The app has more than 40 million active users thanks to its popularity with younger generations. But it has yet to turn a profit for its parent company. 

“While user growth and engagement growth is great, they need to drive more monetization,” MoffettNathanson partner, Lisa Ellis told CNBC. 

Younger adults are historically more likely to use these peer-to-peer apps than their older counterparts. A recent survey from AARP found that nearly 70% of respondents younger than 50 used PayPal, compared to roughly 50% for those over 50. When it came to Venmo, the difference was much more stark. About a third of younger respondents use Venmo, compared to just 9% of those over 50.

The top reasons for using these apps are to send money to a friend or family member, followed by purchasing an item through an online bidding site, according to the AARP survey. PayPal said that was consistent with that it saw in March.

PayPal also saw more “payments of goodwill” and acts of kindness during the Covid pandemic. The Medical Mask emoji, for example, saw a 375% increase from March to April.