Tuesday, August 28, 2012
A Glimpse of PayPal Mobile Payments for the USA in the UK?
By Randy Smith,
Mobile Wallet Media
Tuesday, August 28th, 2012
Could PayPal's "Pay InStore App," now on trial in the UK, be a preview of the future of PayPal's mobile payments in America? It seems to be the 'Missing Link' to provide mobile payments in the US. It appears to work much like the famed, Starbucks Card Mobile App.
I like this solution. It is as it says in their video "FAST, EASY, SECURE AND SIMPLE." The PayPal Blog announced in May of 2012 their "Pay inSTORE" app would be availble for use at Oasis and other major retail brands. This app is available on iphone or Android and allows customers to pay via PayPal. This app enables retailers to use their existing infrastructure to add mobile payments.
PayPal's UK, Pay InSTORE App may be used in one of three ways:
1) Mobile Checkout via ipads.
2) Scan a bar code from the app.
3) Type the number below the bar code directly into the payment terminal.
The Pay inSTORE app may also be used to redeem offers collected online and forwarded to phone app. PayPal users may also opt in to receive and redeem special offers using the app.To quote the PayPal video "The app works with or without signal." as well. This is big!
The UK PayPal In-Store Checkout, like it's 'Sister App' in America, allows users to pay without using their mobile phone. In America, users enter their mobile phone number + pin and in the UK users enter a user or transaction ID to make a payment. Correct me if I'm wrong, but this will require integration at POS to accept these transactions. Payment terminals are programmed or setup to accept only a certain range of gift card numbers. Each gift card provider gets certified on each terminal but merchant acquirers can program terminals to only enable transactions through their partner processor. Having users enter manuelly, a virtual card number, representing a credit card, does not make sense as it opens the gateway to incompliance with PCI.
PayPal's, UK inSTORE Checkout enables merchants, unlike in the US, to scan a bar code to enable mobile payments. It appears the POS register will need to be setup to scan a 1D bar code as a gift card. This can be fairly straight forward, if the merchant has access or ability to configure their POS software to make this adjustment. From there it gets a bit trickier.
Each POS software has a gift card port and some are hard wired to a single processor or solution. If the processor has partnered with PayPal, then they will be able to route the transaction for approval through PayPal. Of course it is possible, through their recent partnership with Discover, that PayPal transactions could ride the rails of Discover, with the processor routing the transaction as a credit card transaction. If this is the case, the processors would likely still need to convert transactions from a non-financial or gift card transaction to a financial or credit or debit transaction in order to reroute through Discover. This may be an unnecessary or not the most easy step due to legacy systems.
Processors such as Mercury, PayPros and Merchant Link may have a key advantage here to utilize their existing relationships with POS vendors. First Data, TSYS, Global, ChasePaymentech and Vantiv (5th 3rd) may also make a big play here and now if they choose to do so. Eventually the transaction would be routed to PayPal to gain the actual authorization using the user's chosen method of payment encased in the Digital Wallet.
Though PayPal may be offering a preview of their mobile payments future for the UK and beyond, it still will require some POS and processor integration. Could PayPal already be partnering directly with POS vendors such as Micros and NCR to create a direct connection to PayPal?
This is by no means out of the question and makes a lot of sense for them to do this very thing. By cutting out the processors, they are creating their own payment network with each direct connection to PayPal. However, I'm sure most processors would wisely partner with PayPal here to take advantage of the 100 million+ PayPal users that PayPal would want to route through their gateway. This seems to be the way to go and is a Win-Win-Win, with the third 'Win' being PayPal connecting merchants with their users.
If processors decide not to work with PayPal, then I'm sure PayPal, if it has not already offered POS vendors the option to connect their software directly to PayPal's API yet, will soon be announcing this soon. I'm not trying to trump PayPal's news or lead them down the road that is available to them, or maybe I am doing one of such? However, PayPal is not the only one that can, will or has already begun building direct payment gateways as such that connect POS to Mobile Wallet, but they will surely be a tough competitor in this space.
There is still, as I pointed out in my prior article on PayPal, another way to avoid this problem of integration, of which Square may have the same problem, and seamlessly use their partnership with Discover to enable their new 'Pay InStore' app, thus requiring no software or hardware integration at point of sale.
I again offer my consulting services. PayPal, networks, processors, POS vendors or Mobile Wallet companies such as MCX please reach out to discuss how we might work together. I look forward to talking to innovative people and companies soon!
Yes, I understand this is not normal journalism, but I'm not a normal journalist. I invented one of the original Mobile Wallets and have been an entrpreneur most of my life and a journalist for less than 30-days.
About Mobile Wallet Media
Mobile Wallet Media is a news media, analyst, marketing and consulting firm focused on the future of mobile: payments, marketing, loyalty commerce, security, prepaid, virtual currency, daily deals and the convergence of them all with social and local. The Chief Editor, Randy Smith, was the primary founder, inventor and former CEO of MobilePayUSA, a TechCrunch Disrupt Award Winner.