November 2, 2011, 5:23 PM

PayPal plans to make in-store acceptance easy for retailers

No new hardware will be needed, says PayPal’s vice president of mobile.

Kevin Woodward

Senior Editor

Lead Photo

David Marcus, vice president of mobile, PayPal

PayPal, the payment services arm of eBay Inc., is willing to talk about its ambition to enable retailers to accept PayPal transactions in their stores. But it is not yet willing to share details of how much that might cost retailers. Still, PayPal’s top mobile executive says merchants should expect few hurdles in making in-store alternative payments happen.

This is because PayPal is using existing technology to enable mobile payments, David Marcus, PayPal vice president of mobile, tells Internet Retailer during an interview today at the Open Mobile Summit in San Francisco. Marcus says one method that may be used involves a consumer entering her mobile phone number and a personal identification number into a retailer’s point of sale terminal. This would not require a retailer to invest in new point of sale hardware, an expense that is impeding the progress of mobile payments via Near Field Communication, or NFC, wireless technology.

PayPal’s in-store payments offering may include bundling loyalty programs into a consumer’s PayPal account, making it easier for shoppers to manage multiple payment and loyalty programs. “We’re trying to help merchants know their customers better and add utility for consumers,” Marcus says.

PayPal wants to offer merchants more than the ability to accept a PayPal transaction in their stores, Marcus says. It is working on a program, which will be tested with an undisclosed retailer this fall that displays a retailer’s inventory in mobile search results, enabling a consumer to buy a product via a phone and arrange to pick up the item in a store. PayPal even set up a storefront in New York City to demonstrate this capability.

PayPal stands to benefit greatly if it can persuade merchants and consumers to use PayPal in stores. PayPal is on track to process $100 billion in online transactions this year, a PayPal spokesman says, but that is a small number compared to the $8 trillion in global transactions at the retail point of sale, as calculated by The Economist Intelligence Unit, the research arm of The Economist magazine.

For merchants the value is in helping them learn more about their consumers, Marcus says. “They need help knowing their customers better,” he says. “That’s why we’re focused on offline. That’s the next big frontier.”

For PayPal, the offline opportunity puts it in a position to be more than just to be a way to pay on the web. “If you really want to expand and become the preferred payment brand,” Marcus says, “you need to enable it so consumers can use you anywhere.”

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