War of the wallets: Paypal takes on Google in digital money battle

Paypal is demonstrating a new digital wallet at SXSW Interactive next week.

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At the conference, Sam Shrauger, a vice president at Paypal, will show off how the Paypal wallet will free consumers’ money to let them “connect it, filter it, personalize it, share it, and make it work for the way that you want it to,” the exec wrote in a blog post.

That’s some high-falutin’ talk, but what does it all mean?

Paypal’s wallet is a set of creative new features that will start rolling out in late May. Basically, these features will let you combine funds from various sources, divide payments into installments, delay payments until after you’ve decided you like the purchase, and more. Altogether, they add up to more flexibility for consumers.

First, the company wants to separate the purchase experience from the payment experience. This would allow you to take something home, test drive it, demo it, and pay for it later. Paypal wallet will also let you pay for a larger purchase in installments and even use different types of virtual currencies for a single purchase, meaning you could pool your airline miles from Delta, your Hilton Honors loyalty points, and a $50 Visa gift card to buy one totally awesome item rather than three semi-lame ones.

The Paypal wallet will also let you do some weird, semi-complicated financial maneuvers. You can set up sub-accounts to designate funds for specific purposes. You can set rules for different purchase amounts, and you can tie certain payment options to specific merchants, e.g., only use your blue MasterCard for Amazon.com purchases.

Paypal wallet is also bringing in personal lists, which you can use to find goods or services you want and do some comparison shopping along the way. Finally, Paypal is dabbling in what it calls “found money” — deals and coupons for items on your personal lists that you unlock once you walk into a relevant store.

Schrauger concludes that rather than competing directly with Google Wallet and linking funds to a mobile device, Paypal is trying to think about money in even more futuristic ways.

“We are reimagining money to free it in its digital form so that it can work better for everyone,” he wrote on the company blog. “These features and examples are only the beginning: moving forward, we’re only limited by our ability to imagine what’s possible.”

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Image courtesy of PeJo, Shutterstock