PayPal unveils mobile payments for in-store shopping

No plans to rely on near-field communication

PayPal has unveiled a mobile payment initiative for shoppers that doesn't require near-field communication (NFC) technology inside smartphones.

The system relies instead on using smartphones and other mobile devices to scan product bar codes and to authorize payments through PayPal mobile accounts. Users will also be able to use credit-card scanning terminals commonly seen in grocery stores: The user inputs a phone number and PIN on the terminal's keypad instead of swiping a credit or debit card.

PayPal President Scott Thompson laid out the basics of the plan in a blog posted Wednesday. In the blog, he also took a swipe at competitors, including Google, MasterCard, Visa and others, who are working with NFC in smartphones for a mobile wallet.

"Let's be clear about something -- we're not just shoving a credit card on a phone," Thompson said in his blog.

PayPal is already a major global force in online payments, with 100 million customers. While PayPal's new payment technologies don't rely on NFC, they do propose making in-store payments possible from any device and support GPS-based offers, according to Thompson's blog. PayPal will even allow for customers to set up payments on credit after they've checked out.

Along with a Thompson's blog is a video showing the various methods of payment that PayPal will support. Thompson also promised more details at the X.commerce Innovate Conference Oct. 12-13 in San Francisco.

In the video, one user pays for groceries at a terminal by inputting a phone number and PIN on a terminal. In another segment, the user scans a barcode on a product with a smartphone, uses the phone to pay for it and walks out of the store with the merchandise while showing the clerk her phone was used for payment.

Dozens of merchants got a sneak peak of the technology Wednesday at an event PayPal sponsored. The event was covered by All Things D, which was not allowed to take photographs, but posted a story. In addition to the payment methods shown in the PayPal video, that story said PayPal will allow customers to continue using plastic cards, issued by PayPal, for payment.

In an interview posted on AllThingsD, Thompson said the PayPal approach doesn't require merchants to install new terminals, nor does it require customers to buy a new smartphone.

While Thompson didn't rule out NFC, he did say, "We are not embracing technology," adding that working with NFC on a specific phone with a certain network and banks might only service "50 people out of 350 million people in the U.S."

Starbucks has also expressed concerns about the long lead time for NFC technology to develop and has relied instead on barcode scanning with smartphones to allow customers to make in-store purchases.

PayPal said in February it would start pilot programs of mobile payments within a year, but hasn't given more details on timing. It faces a number of competitors.

All the major credit card companies and many major U.S. banks have announced plans for mobile payments. Google said it would work with MasterCard and Sprint on launches later this year, while Visa has described separate initiatives. Isis, a consortium of three major wireless carriers, has plans for two pilots in 2012.

PayPal and its parent eBay have also filed a lawsuit against Google for stealing trade secrets related to mobile payments and point-of-sale strategies.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His e-mail address is mhamblen@computerworld.com.

Read more about mobile and wireless in Computerworld's Mobile and Wireless Topic Center.

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Tags retailsmartphonesGooglewirelessNetworkingfinanceFinancial Servicespaypalconsumer electronicsindustry verticalsvisawireless networkingMobile and Wireless

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Matt Hamblen

Computerworld (US)
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