September 15, 2011, 4:51 PM

PayPal moves offline

eBay wants to use PayPal to tie stores with e-commerce.

Lead Photo

EBay Inc. has launched a slew of new PayPal technologies aimed at integrating the online marketplace’s payments arm into bricks-and-mortar retail stores.

The online marketplace’s vision is for consumers to use PayPal throughout the purchase process—this could include viewing mobile ads geared to the shopper’s location before entering a store, scanning a bar code while in a store, using PayPal’s real-time inventory search to look for a local merchant that has a product in stock, paying for the product, and also managing the payment of the purchase via a consumer’s virtual wallet.

“PayPal is reimagining money and making it work better for merchants and consumers—whatever device you’re on, wherever you are in the world, and however you prefer to pay (whether that’s cash, credit, or installments),” writes Scott Thompson, PayPal’s president, in a blog post this week.

Among the more immediate ways PayPal aims to incorporate itself into the physical world is by offering consumers multiple ways to pay—ranging from entering a telephone number and a personal identification number to tapping a phone on a payment terminal. PayPal also plans to issue a card that users can pay with at existing credit and debit card terminals in stores; PayPay gave no details about the proposed card.

“What we're bringing to point-of-sale is an approach that merchants like in that it will accept all tender types, be they card or hands-free or mobile,” said John Donahoe, eBay’s CEO, during a recent conference call with analysts in which he hinted at this week’s announcement. “And any mobile solution—our solution will work with any mobile device or mobile software platform or operating system. And so it's payment-type agnostic, and merchants like that because it's going to enable them to help scale the PayPal solution across not just one store or one shop but across nationally all their stores and all their checkout lanes”

PayPal aims to roll out point-of-sale functionality to up 20 national retailers by next year, said Donahoe. “We intend to help retailers grow their businesses offline in the same way we help merchants grow online around the world,” he said. He did not say what PayPal would charge merchants for accepting PayPal in stores, and eBay could not be reached for immediate comment.

PayPal also wants to enable consumers to pay with their mobile device without ever going to a checkout counter. In a video posted on the eBay blog, a shopper walks into a crowded grocery store, scans the bar code of a bottle of barbecue sauce and birthday candles using the PayPal app, clicks Pay via PayPal and walks past the cash register after a cashier waves to assure her she received the payment.

“We all know that shopping is fun but paying is not,” writes Thompson. “Nobody likes to stand in line. Nobody likes waiting for their bill at the restaurant. At PayPal, we want to free you from the cash register. The act of paying for something should be as seamless as your decision to buy it.”

PayPal also hopes to enable a shopper to scan a two-dimensional QR code to receive discounts when he walks into a store, according to the video. Merchants would be able to automatically credit that discount to the user’s PayPal account if he buys the promoted product. After completing the purchase, consumers can select and change the way they pay—such as applying PayPal credits or using a credit card. 

EBay sees PayPal’s move into the bricks-and-mortar space as a “fairly significant incremental opportunity that will play out over the next three to five years,” said Donahoe. His confidence is bolstered by PayPal’s ability to leverage its 100.3 million PayPal accountholders.

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