With 13 years of e-commerce payments and processing more than $10,000 per minute in mobile payments, PayPal is jumping offline. The company plans to introduce PayPal Wallet next year as a service to merchants, and to replace credit cards burning a hole in consumers' wallets.
The pitch: PayPal Wallet is NFC-free and only requires that participating merchants upgrade software instead of investing in a hardware change. Users pay at PayPal-enabled terminals with a PayPal credit card and PIN – or down the road, an NFC-enabled tap. It's also competing with competitors like Square and NFC solution-based wallets from cell phone carriers and Google Wallet, and even social check-in services such as Foursquare and group discount providers such as Groupon.
Unveiling the service in New York for the official opening of PayPal’s Shopping Showcase this week, where the brand is wooing local businesses to check out its mobile payments, PayPal President Scott Thompson blogged:
“Over the next 12-24 months, we’ll introduce technologies that give consumers the choice to “swipe, enter, or tap” when they pay… And no matter how you pay, you can go back and change the payment terms, even after the purchase…In short, we’re not just making a smarter wallet, we’re making money smarter.”
To deliver on a truly digital wallet, eBay has made several key acquisitions including Where Inc., a location-based service and media company with smartphone mobile apps including geofencing technology; Milo, a localized search engine to scan merchants' inventory; and RedLaser, a barcode-scanning app that locates the lowest available product price.
The Manhattan showcase, where PayPal Wallet is setting up shop through February, is finding a "very enthusiastic" response by local merchants and businesses, according to Laura Chambers, the company's head of mobile payments. As for PayPal’s approach to NFC, “It’s three to five years out before NFC is at scale,” she told Reuters, predicting that it will take off much more slowly than many people expect.
So who will pay for the equipment upgrades and wireless transactions? “That’s going to be one of the big challenges,” Chambers added, as neither merchants, operators nor payment networks like Mastercard or Visa want to foot that bill.
“If NFC gets to the point where retailers are adopting it at the point of sale and consumers are showing a propensity for using it, we will enable it, but we are not depending on it,” said Sam Shrauger, VP Global Product and Design at PayPal. “There’s no time frame for NFC, it just depends on the way the market moves… We want to give customers a way to pay however they want to pay.”
With its loyalty points, special offers and check-ins, PayPal Wallet is also taking the brand into new territory. “If someone had told me ten years ago that PayPal would be doing offline payments, I would have laughed,” said Chambers. “It’s no longer going to be about online or offline commerce, ecommerce, m-commerce. It’s just going to be about commerce.”
Wrapping it all up in blue, the PayPal Shopping Showcase is designed by Simon Doonan, renowned for Barney’s New York window displays. “Having worked in retail marketing and display for so many years, I am delighted to be part of this revolutionary moment in PayPal’s history," Doonan quipped. "It sounds crazy, but PayPal has managed to make paying for things sexy. Who knew?”