mobile commerce

PayPal Expands Into Offline Payments

Posted by Sheila Shayon on November 4, 2011 11:31 AM

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?”


Philip Cohen Australia says:

Pump, pump, pump …

“Most folks on Wall St. view eBay really as PayPal plus a marketplace …”

That’s an astute observation, but John Donahoe and Scott Thompson are simply delusional if they think that PreyPal can continue to underpin the faltering eBay Marketplace “house of cards” by becoming even a minor threat to the existing payments systems of the banks/Visa/MasterCard 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 PreyPal, an unethical, unprofessional, effectively unregulated and clunky financial operator that offers unlicensed banking-type services and is, in effect, simply a money gouging arm of the Ho’s “eBafia”?

Even though PreyPal clearly offers banking-type services (ie, holding users’ funds in non-prudentially regulated and non-FDIC insured banking-type accounts, etc), PreyPal is mostly registered in some places not as a bank nor as a provider of credit but only as a “money transmitter” (like Western Union), and PreyPal has even claimed that they “are not a payment network”, and there is a grain of truth in that claim because most (but not all) of their activities facilitate the transmission of funds simply 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, Visa/MasterCard and the banks’ existing payments processing systems.

Regardless, outside of PreyPal’s mandated use on whatever will ultimately be left of the Donahoe-stagnated* eBay Marketplace, PreyPal (and most other third-party payments processors) will eventually be consigned to the history books by the retail banks/Visa/MasterCard once those “professional” players get their “online” act together. There is nothing surer than the sun will rise in the morning.

Both eBay and its ugly daughter PreyPal are most devious, unethical, unprofessional organisations: both have become the most despised commercial entities on the planet—apparently, more hated by many than even “the banks”.  eBay, amongst many other things, has forever knowingly and criminally, facilitated shill bidding fraud on their trusting auction buyers. And what else can be said about PreyPal that a great many PreyPal merchants don’t already know, to their cost: the probability is that if, as a merchant, you have chosen, or are forced, to use PreyPal you are eventually going to get burned; it’s really only a matter of the degree of the burn.

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 real merchant account from their own bank—Oh, hang on, hasn’t PreyPal always been just that, and charged all their users accordingly?

* See

PreyPal Claims that PreyPal Is Not a Payments Processor!

eBay, a Knowing Criminal Facilitator of Auction Shill Bidding Fraud: Case Study #4:

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

Enron / eBay / PayPal / Donahoe: Dead Men Walking.

November 4, 2011 06:21 PM #

Drucilla Rupel United States says:

The post was good and nicely written, although, the layout of the site doesnt seem to much the content.

November 10, 2011 02:14 PM #

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