PayPal yet to give up on NFC

PayPal's parent company's CEO may have pooh-poohed NFC, but it appears PayPal is still looking at it as a viable technology for making payments, according to spokesperson Adrian Christie.

Despite deriding the use of near-field communication (NFC) for payments earlier this year, eBay subsidiary PayPal has not abandoned the technology, according to the digital payment company's head of PR and communications Adrian Christie.

During the eBay subsidiary's second-quarter financial results briefing, eBay CEO John Donahoe, who was then PayPal's acting CEO, said NFC will "never" be ready, and does not offer consumers real value. Instead, PayPal ditched its NFC payment experiments, launching PayPal Here, an in-store cloud payment system that only requires users to enter a PIN, and rolling that out to over a dozen retailers in the US.

Today, the company has released its PayPal Here API, which allows its cloud payment system to be integrated into existing point-of-sale (POS) terminals. Customers can check in to a participating store using a smartphone app, and make payments through their phones, bypassing the need for NFC altogether.

But Christie told ZDNet today that despite skipping past NFC with PayPal Here, the company has definitely not given up on contactless payment technology.

"We just see NFC as a modality, a token, a way to connect to a terminal, but there are other ways to connect a terminal and NFC is not the only way," he said. "I know there is definitely some concern from consumers in terms of reliability of NFC and tapping, but we're watching all those indicators, and in no way are we ruling it out."

That being said, PayPal is also experimenting with different technologies, such as Bluetooth.

"We outlined 2012 to 2013 as a time to test and learn, to see what consumers are willing to do or would like to do [with payments]," Christie said. "We do a lot of research into consumer behaviour, and sometimes the actual benefit of unlocking our phone, going into it, and then tapping it on an NFC terminal is less than quickly and easily tapping your credit card."

A number of major Australian banks, including ANZ and Westpac , are dabbling in NFC mobile payments with smartphone trials.

After spending 14 years targeting online payment, PayPal is ramping up its efforts in bricks-and-mortar retailers. The company understands that e-commerce and online retail in particular are experiencing a boon, but it doesn't believe that this will be enough to kill off physical shops.

"If there's one message I want to leave you all with, it's to not only focus on e-commerce," PayPal Australia managing director Jeff Clementz said. "Even if it keeps growing at 10 percent, or if it explodes and grows at 20 percent per year, it's not going to overtake traditional retail.

"We have to be more reflective about consumer behaviours changing, and that there's a blurring of the line between online and offline."

With over 4.6 million Australian users already on PayPal, the company hopes its PayPal Here API will expand across the retail sector. It is already working with POS terminal providers such as Micros, Island Pacific, Kounta, and Vend to roll out PayPal Here on existing terminals.

In the next few weeks, retailers and fast-food outlets such as Guzman Y Gomez and Sonoma Bakery will be enabling PayPal Here payments.

Earlier this year, PayPal launched its PayPal Here dongle, which plugs in to the headphone jack of certain smartphones and tablets. It connects them to a PayPal app, and allows retailers and SMBs to accept card payments.

It is still in its pilot phase, which has now been closed off due to popular demand for the dongles. A wider rollout is expected in early 2013.