PayPal Inc. has hired Blackhawk Network founder Don Kingsborough to oversee its expansion into brick-and-mortar stores as it steps up competition with Visa Inc. and MasterCard Inc.
Kingsborough, who oversaw Blackhawk's efforts to bring prepaid gift cards to Safeway Inc. and other grocers, will lead PayPal's push into retail stores in the second half of the year, the eBay Inc. unit said.
"We're going with a whole new experience that is different than the traditional cardlike experience," said Scott Thompson, PayPal's president. "That requires us to rebuild the whole infrastructure around point of sale. Don, because he did that at Blackhawk, is the type of person we need here."
PayPal is focusing on consumers using mobile devices and the walk-in stores where Visa and MasterCard dominate. It plans to introduce a redefined point of sale system with major retailers, Thompson said.
Thompson, 53, a former Visa executive who joined PayPal in 2005, has replaced most of the senior management team over the past two years. He has brought in executives from Citigroup Inc. and American Express Co. to sharpen PayPal's expertise in security, customer service and compliance with banking regulations.
The management bench will help PayPal navigate the broader world of payments, where it expects its global market share, now 18%, to rise to 23% in three years, Thompson said. "Everybody at the executive level today has done something bigger in their career than what they're doing at PayPal today," Thompson said. "That means they're not connecting the dots for the first time."
Kingsborough, 64, who is vice president for retail and prepaid products, will build on his experience designing and running the Blackhawk prepaid card network, which is owned by Safeway.
"Ten years ago that whole industry didn't exist," Thompson said. "Don, working with the Safeway executives, created that business from scratch. That's exactly the mind-set you need."
PayPal, of San Jose, Calif., is not the only company seeking to promote a plastic-free world where shoppers swipe phones at cash registers in sandwich shops, enter mobile phone numbers on a keypad to transfer money, and push funds to a service station from their Internet-connected car while pumping gas.
At the same time, Visa, MasterCard and American Express are duplicating PayPal's efforts. The companies collectively spent almost $3 billion last year on Internet-based payment processors.
"There are huge opportunities now even in the cracks between features that PayPal hasn't implemented," PayPal co-founder Max Levchin, now an executive at Google, said at a technology event in January. "There's opportunity by way of PayPal not having enough time to develop everything."
PayPal is trying to fill in those cracks by enabling software developers to build products on top of its service. Developers generated $1 billion in payments for PayPal in the first year it gave programmers access to its software code. Still, the project has hit obstacles. Osama Bedier, the executive leading it, joined Google's payments team in January.
PayPal says going after payments in walk-in stores will help it double revenue, to as much as $7 billion by 2013. As shopping habits blur between online, mobile and walk-in stores, PayPal says its expertise handling consumers' transaction data over multiple platforms gives it an advantage.
