PayPal extends mobile wallet, but no NFC
Company says NFC is technology for technology's sake, as it extends its alternative to five more retail chains
Published: 15 January, 2013
PayPal is extending its US mobile wallet roll-out - a process which is cautious so far, but closely watched by the mobile payments industry. The eBay internet payments giant has the power to shape this important emerging market, and the firm has stood out from the crowd by sidelining NFC in its strategy.
Its wallet uses an alternative approach to the NFC contactless communications standard, which underpins most mobile wallet initiatives including many run by carriers (the Isis group in the US, for instance), and Google Wallet. Although PayPal has tested some NFC products, it has remained lukewarm about the technology, because of the need for merchants and consumers to adopt new equipment and habits. Its opposition is a significant negative for the vision that NFC will be the only standard driving the m-payments boom.
PayPal is adding five new US retailers to its wallet roll-out, bringing the number of participating bricks-and-mortar outlets to 18,000. This is part of eBay's broader strategy to create an end-to-end e-commerce platform spanning web, mobile and physical stores, with payments integrated with a range of merchant and back office services. Although carriers and web giants will need to work with PayPal, they will also resist its attempts to be the kingpin in the m-payments value chain, a role Google and operators like Verizon want for themselves.
At the end of last year, PayPal had mobile wallet deals with 23 national retailers and has now added RadioShack, Dollar General, Famous Footwear, Mapco Express and Spartan Stores, with two more to be announced soon. TechCrunch reports that the company is also testing a new ordering option with Jamba Juice, enabling customers to prepay for their order via PayPal, schedule a pick-up time and go to the front of the queue on arrival.
The wallet works by allowing users to link their PayPal accounts to their handsets and pay for purchases by entering their phone number and PIN code into the retailer's existing point-of-sale terminal. The service also offers price comparison and shopping list tools and support for coupons and offers from retailer partners. Later this year, payments processing firm Discover will enable its 7m US merchant partners to accept PayPal transactions and the deal could be extended to its international payments network.
In a PayPal blog post this week, the firm's VP of retail services, Don Kingsborough, took a swipe at the NFC strategy, which has become religion for some challengers to its payments crown. He wrote: "Some of the competition has stumbled with alternative technology offerings that don't address true customer pain points. They have created technology, just for technology's sake."