PayPal focusing more on mobile shopping than payments

PayPal focusing more on mobile shopping than payments

Summary: PayPal's virtual and mobile wallet offerings may redefine how we think about mobile payments.

TOPICS: E-Commerce

SAN FRANCISCO -- PayPal brought its digital wallet solutions to eBay's Innovate Developer Conference 2011 this week. The show itself is dedicated to the new X.commerce open platform.

See also: eBay CEO: We're at an 'inflection point' in commerce PayPal jumps onto HTML5 bandwagon, also heading for consoles

A big focus for this platform is mobile payments, a hot topic that has many commerce companies, retailers, and developers scrambling to figure out how to meet this trend.

One feature that has largely been absent from the X.commerce show so far: NFC. There has been a lot of buzz this year that near field communications technology as the key to mobile payments.

This isn't to say that PayPal is ignoring NFC. In fact, PayPal introduced a peer-to-peer payments solution for Android devices this past summer.

But maybe NFC really isn't the key after all -- or at least not for now.

During a panel discussion at GigaOM Mobilize 2011 in September, Laura Chambers, senior director of PayPal Mobile, acknowledged that NFC is a “great technology,” but mobile payments is already happening really quickly. Thus, PayPal isn’t waiting around for three to five years for that medium to grow.

“We found that it’s important to have a solution that is broad and flexible,” Chambers said, adding that “trying to push something new on to them was not going to work.”

A few weeks ago, PayPal gave a sneak peek of its virtual wallet offering. While it was definitely intriguing during an in-person demo at the Innovate show, it didn't feel very mobile -- at least in the terms we're all expecting, such as being able to pay with a smartphone and nothing else required.

The mobile part is based upon several other eBay subsidiaries, such as RedLaser and Where. In the case of RedLaser, the mobile part of the payments process is better emphasized with the integration of PayPal Access, a simplified way to make payments tied to a person's PayPal account.

With the location-based Where app, users can, for example, place an order at a local cafe before arriving, and the receipt will be delivered back to the consumers on the app itself.

However, in this case, the payment process itself is not mobile. Instead, it's another card, and this one is just one issued by PayPal. At first, this doesn't seem very innovative. But it actually is quite different from anything we've seen before.

Here's the basic rundown: PayPal issues a card to the user. It looks like a regular credit card, except there is no name or number on the card. There is still a signature space on the flip side along with a swipe strip. To use the card, the customer must enter a unique pin number connected to the card.

This is where the fun part comes in. That card can be connected to all of the user's financial accounts (or at least the ones you can make purchases with). So that means debit and credit cards, a bank account, and even gift cards. So instead of having to carry around all your credit cards, you could just use this one.

When making a payment, the charge will either automatically debit from the applicable gift card or it will be assigned to the default payment method assigned by the user online. The merchant gets paid up front by PayPal, but the user has up to 14 days to change which payment method they want to use. (The alternative to the card is using a phone number attached to the account, plus the pin, but the concept and payment structure remains the same.)

That system will be going into pilot mode in early 2012.

While that's certainly unique and it's tied to a lot of other mobile functions, the payments process with this particular product is still not mobile -- at least not in the way that most people have been discussing the topic in the last year. Are mobile payments defined by a chip on a phone? Or does a RedLaser barcode scan do the same job?

This could represent an intersection for PayPal. On the one hand, it seems to be waiting for NFC and other mobile payment technology forms to take off instead of wasting time and resources on something that most analysts can agree on just isn't ready yet. Only a handful of smartphones are even going to have NFC in the next few months, and very few merchants nationwide will welcome them.

Although one could also argue that PayPal is not being as innovative as it could be in this arena by resting on apps that focus more on improving mobile shopping rather than actual buying, thus perhaps missing the boat on a huge market.

Topic: E-Commerce

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  • RE: PayPal focusing more on mobile shopping than payments

    There seems to be all of these retail apps coming to the market but what about an app for B2B payments. Did you guys hear about CSI globalVCard? It just launched September 1st to Android and I heard they just launched to iOS and soon they will launch to blackberry.
  • RE: PayPal focusing more on mobile shopping than payments

    Both John Donahoe and Scott Thompson are simply delusional if they think that PayPal can underpin eBay by becoming even a minor threat to the existing banks/Visa/MasterCard payments systems at traditional Point-of-Sale???the idea is pure science fiction. (Beam me up Scotty!)

    The real question is, when are the world???s various "banking" regulators going to finally do something about over-sighting this most amoral, unprofessional, unregulated, clunky ???financial??? operator that not only acts like a bank but is in reality a money gouging arm of the Ho???s ???eBafia????

    Even though PayPal clearly offers banking-type services (ie, holding users??? funds in non-prudentially regulated and non-FDIC insured banking-type accounts), PayPal is mostly only registered in some places not as a bank nor as a provider of credit but only as a ???money transmitter??? (like Western Union), and indeed PayPal itself has even claimed that they ???are not a payment network???, and there is a grain of truth in that claim because it is a fact that most (but not all) of their activities facilitate the transmission of funds by riding on the back of the banks??? existing payments processing systems.

    In fact, the only thing creative about PreyPal has been their founding use of users??? unique email addresses as identifiers for online payment transactions. PreyPal is otherwise no more than a blood-sucking parasite riding on the back of, and in the main cannot function except via, the banks??? existing payments processing systems.

    Regardless, outside of its mandated use on whatever will ultimately be left of the Donahoe-stagnated eBay Marketplace, PreyPal (and any other third-party payments processors) will undoubtedly be consigned to the history books by the retail banks/Visa/Mastercard once those players get their ???online??? act together. There is nothing surer than the sun will rise in the morning.

    Both eBay and its ugly daughter PayPal are most amoral, unprofessional organisations: they both have become the most despised commercial entities on the planet???even more hated that ???the banks???. eBay, among other things, has always knowing and criminally, facilitated shill bidding fraud on eBay???s trusting auction buyers. And what else can be said about PreyPal that any PreyPal merchant does not already know? It???s a most ???clunky,??? unprofessional operation.

    Having said that, it???s possible that PreyPal can survive by becoming the merchant account ???provider of last resort??? for those very small or unscrupulous merchants unable to get a professional merchant account from their own bank???Oh, hang on, hasn???t PreyPal always been just that, and charged their users accordingly?

    eBay is a Knowing Criminal Facilitator of Shill Bidding Fraud on eBay Auctions: Case Study #4:

    PayPal claims that PayPal Is Not a Payments Processor!

    And, from along the way, a compilation of (mostly inane) quotes from eBay executives:

    Enron / WorldCom / eBay / PayPal / Donahoe: Dead Men Walking.
    Philip Cohen
  • Virtual Wallet?

    Makes me wonder how I could have been so wise as to have just said "NO" to the whole PayPal idea way back when.