PayPal Inc.’s planned entry into the brick-and-mortar space has been known for some time. But the eBay Inc. subsidiary this week released some details about how it would handle those payments and revealed that most, not surprisingly, would involve a smartphone.
PayPal is seeking to engage consumers during every step of what it calls the shopping lifecycle. The company is aiming to accomplish this without requiring merchants to adopt additional infrastructure or ask consumers to upgrade their phones or use certain bank accounts, a company spokesperson tells PaymentsSource in an email.
“PayPal’s approach has always been very simple,” the spokesperson says. “We make money work better no matter how you choose to pay.”
PayPal showcased its payments options in a recent presentation to a retailers at an event in Los Angeles in mid-September (
One scenario shows a buyer interacting with a PayPal application at a merchant’s point-of-sale. Another buyer is seen scanning barcodes at a supermarket, putting those goods in a shopping bag and paying for them instantly on a PayPal mobile phone app bypassing the cashier’s line.
PayPal also will integrate location-based merchant offers through mobile alerts when a consumer is in a retailer’s general area.
“The act of paying for something should be as seamless as your decision to buy it,” Scott Thompson, president of PayPal, wrote on the company’s blog Sept. 14. “The future is about creating real consumer choice, flexibility and control over how people shop and pay.”
Of course, PayPal is not the only company aiming to provide consumers these kinds of payment features going forward. Google Inc.’s mobile wallet and Isis also are seeking to change the consumer-payment experience via the smartphone.
Google Inc. and its mobile-wallet concept continue to gain momentum. The company recently purchased Motorola Mobility Holdings, which designs, manufactures and distributes mobile phones (
Google already has tied Citigroup Inc., MasterCard, Sprint Nextel Corp., First Data Corp. and 16 merchants into a partnership for its Google Wallet mobile-payment scheme, which is still in test mode but will support contactless payments from NFC-equipped phones.
And various wireless carriers involved in mobile-payments venture Isis reportedly plan to invest more than $100 million into the project (
While a front-runner in the mobile-payments race might take time to develop, some industry analysts believe a functioning product is more important than which scheme comes out as the winner with merchants and consumers.
“The solutions that have to be in place on the merchant side to enable the consumer [to make payments] have to be ubiquitous enough to ultimately make it a consistent shopping experience for the consumer like it is today with credit card and cash,” Beth Robertson, the director of payments research at Javelin, tells PaymentsSource.
Smaller merchant partners might be first in PayPal’s trial, Robertson says. But bigger merchant partners are needed to get better saturation in the market, she adds.
PayPal is expected to test its system before the end of the year with some 20 merchants. A broader rollout is scheduled for some time next year.
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