PayPal has been pretty down on near field communication (NFC) for payments, saying that while it’s a promising technology, it was avoiding NFC because it needs at least three to five years to get traction and requires a big investment in hardware by merchants. But the company is softening its stance as it prepares to pitch retailers on its vision for in-store mobile payments.
PayPal on Thursday is opening up a bright and festive showroom in downtown New York to sell retailers on its take on how mobile in-store payments will evolve in the coming year. It’s offering a number of stations that show how PayPal will enable multi-channel payments by its users in-store and on their mobile devices. We’ve written about PayPal’s expanding vision of mobile payments and the company showed off its suite of merchant tools at its recent X.commerce Innovate conference.
But one new difference from earlier demonstrations is that the point-of-sale showcase in New York now includes a “tap phone” option for NFC contactless payments that can be triggered through a tap of the phone. PayPal isn’t committing to using NFC for payments yet, but it included it to show that it is prepared to enable those payments when the demand arrives.
“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, vice president of Global Product and Design at PayPal. “There’s no time frame for NFC, it just depends on the way the market moves. It could be next year or in five years.”
PayPal has NFC experience
It’s not like PayPal has no experience with NFC. It enabled NFC payments in July for peer-to-peer money transfers between Android devices. But it said at the time that it was only using NFC for person-to-person payments. At GigaOM’s Mobilize conference, Laura Chambers, senior director of PayPal Mobile, called NFC a “great technology” but one that needed to mature first before PayPal would use it. Chambers said PayPal was pushing its own solution that didn’t require merchants to buy any new NFC hardware.
“We found that it’s important to have a solution that is broad and flexible,” Chambers said at the conference, adding that “trying to push something new on to (merchants) was not going to work.”
Now, PayPal is still not committing to NFC and this might just be some marketing maneuvering. But it’s demonstrating that while it’s building up a comprehensive solution for merchants, it’s also showing that it’ll be prepared to go with NFC when the need is there. It’s not a bad idea for PayPal, which is trying to sell itself as a complete one-stop shop for merchants. It’s unlikely that NFC payments will gain huge adoption by next year but PayPal can say that it will be there whenever that day comes. Until then, it’s preparing all the tools retailers need now. PayPal’s in-store tools are not scheduled to hit stores in the first half of next year.
PayPal is now in the process of explaining to retailers why its approach stands out in an increasingly crowded field of options that includes Square, digital wallets from major credit cards and emerging NFC solutions from Google and the cell phone carriers. The New York showroom opens for appointment-only visits on Thursday and runs through February. Later this quarter, PayPal is set to start testing its in-store tools with a unnamed major retailer.
Building a multi-channel payment service
PayPal’s system revolves around a new PayPal mobile app that will serve as an expanded digital wallet good at all kinds of physical retail shops. The benefits of the app is that users can connect their credit and debit cards into it, in addition to carrying a PayPal balance. They can also connect loyalty cards from participating merchants. If a consumer opts in for alerts from a merchant, they can get push notifications for deals when they’re nearby a location thanks to technology from WHERE. The wallet can hold on to the discount and apply it at check-out or, in some cases, consumers will be able to purchase a product right from the aisle and have the item shipped to them. One cool feature of the app is that it allows users five days and sometimes up to 30 days to change their funding options after a transaction, so they can choose instead to spread out a payment between credit and debit cards or pay in installments.
The PayPal app can also record shopping lists and wish lists and will grab and apply relevant offers from participating merchants for those items. Users will be able to take a picture of gift cards to load their value on to the PayPal wallet. And in some cases, when a user receives a push notification from a merchant, they may have the option of buying it immediately and walking in to pick up their purchase. At check-out, users will be able to pay by swiping a physical PayPal card, that can be loaded up with multiple funding sources and loyalty cards or they can pay by entering in their phone number and PIN.
Flexible tools for merchants and consumers
Shrauger said PayPal is working on providing a flexible set of tools that helps retailers optimize sales as they incorporate online, offline and mobile payments. It’s also selling its 100 million-strong user base, a sizable audience that is already familiar with payments through PayPal. And PayPal isn’t forcing any merchants to buy new hardware and is instead using existing channels to facilitate sales.
Ultimately, it’s about providing all the tools that retailers and consumers want and letting them gravitate to the ones that makes sense to them, whether it’s NFC or any other options, Schrauger said.
“We want to give customers a way to pay however they want to pay,” Shrauger said.