PayPal is revamping its apps in 2021 to catch up to the competition

PayPal says that over the next year it will update its PayPal and Venmo apps with a suite of new features including direct deposit, check cashing, crypto support, buy now/pay later functionality, and more.

While still a major player in digital payments, the company in making this announcement is aiming to fend off a host of competitors who have chipped away at corners of PayPal's early lead in the roughly $50 billion space.

Attacks from all corners — Take Square. Besides offering merchant payments processing, it has the Cash app, a competitor to Venmo for sending money to friends but that recently added support for direct deposit and purchasing cryptocurrencies. Then there has been the rise of pay-in-installment companies like Affirm and Afterpay, which offer buttons on e-commerce websites that allow customers to pay for items like clothing in three or four payments. Apple Pay and Google Pay are increasingly available on websites as a payment option.

PayPal for years benefitted from being an early player in online payments and linked to eBay where it was the only way to pay for goods. But it hasn't really kept up with the times, and its brand is tired. The question becomes, what reason do consumers need to use PayPal when there are so many competitors that do everything that PayPal does and more, and do them better?

One-stop shop — If integrated well, the planned suite of features has the potential to bring people back to PayPal and turn it into something of a modern alternative to a traditional checking account. You could have your paychecks deposited right into PayPal and then pay in a myriad of ways.

PayPal says that once cryptocurrency support is built into the PayPal and Venmo apps, users will be able to buy and sell currencies, as well as use their crypto to purchase goods from more than 28 million merchants that accept PayPal. The company aims to support Bitcoin, Ethereum, Bitcoin Cash, and Litecoin starting in the first half of 2021.

Then there's a planned integration with Honey, a company PayPal acquired that helps people find the best price on the products they're interested in. Once it's inside the PayPal app, users will be able to bookmark items and get alerts when the price drops. With "Pay In 4," they will be able to buy the item using PayPal and spread out the purchase in installments, using money from direct deposits.

PayPal still has a relatively strong brand. It could remain atop the digital payments thrown if it actually can make a slick, convenient alternative to a traditional bank. As the cliche goes, we'll have to wait and see.