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PayPal: Mobile cloud will lead the way with mobile payments

PayPal has its eye on several digital wallet initiatives that are all aimed at storing information in the cloud and making it easier for merchants and consumers to buy products on a variety of different devices.

PayPal is showing off its mobile payment services with two walk-though exhibits in New York and San Jose, CA that help show consumers and retailers how the company’s technology works. The exhibit uses both in-practice and visionary services, all of which PayPal expects to be rolled out in the next year or two.

“The reality is that consumers will use whatever screen is closest to them to pay for something,” said Anuj Nayar, director of communications for PayPal, San Jose, CA.

“It is not just about mobile phones and tablets – it can also include televisions, point-of-sale systems and other things,” he said.

Small payments
PayPal has announced that its revamped digital wallet will be launched in May.

Last week, PayPal introduced its Here service that lets users and small businesses make mobile payments via a thumb-sized reader and an application.

At the exhibit, PayPal representatives walked consumers through the process of buying things via the service.

Since the service was announced, Mr. Nayar claims that PayPal saw a list of 1,000 merchants per hour for the first 24 hours asking to start using the service.

The app is available for iPhone devices and lets consumers use their mobile device as their wallet in a variety of ways. For example, users can use their credit cards, PayPal account, an invoice or checks to pay for goods at merchants who accept PayPal Here.

Once a user opens the app, they drag a digital pin down on the screen to show that it is OK for the app to use their location.

Consumers can then see a list of merchants near to them that accept PayPal Here.

From the merchant side, businesses must also download the app to complete a transaction. The app then shows all of the users who are nearby to a merchant, which can be used to charge consumers.

If a consumer wants to pay via credit card, merchants plug in a triangle-shaped reader into the jack of the smartphone to swipe the card.

The merchant then selects the way that the consumer is paying and charges the user’s account.

Consumers are then sent a receipt via SMS with a link to a mobile Web site that details their transaction with information including the merchant’s map and address.

Mobile shopping
One of the ways that mobile has fundamentally changed retail is with mobile bar codes, which PayPal is incorporating as it thinks about new ways that consumers are shopping.

For example, by placing a mobile bar code in a store window, shoppers could automatically find out more information about products and buy the item using a digital wallet that lives in the cloud.

A retailer could then send a consumer a push notification to let them know that they have been pre-approved for the company’s credit card to help drive in-store traffic.

Once a consumer bought something via their digital wallet, the retailer could be sent information about the user, including contact information and shopping behavior.

Tablet sales
Tablets are quickly becoming a goldmine for mobile commerce, which PayPal is also anticipating will be a big trend for 2012.

In November, PayPal announced that Black Friday mobile payment volume grew 516 percent year-over-year (see story).

According to Mr. Nayar, a good chunk of those sales were most likely coming from tablets while consumers were sitting on their couches and buying holiday presents.

Therefore, the digital wallet will play a key role in connecting in-store and Web commerce for consumers by giving them options for how and where they want to buy something.

PayPal is also banking on mobile point-of-sale systems playing a large role for consumers.

For example, users could swipe a PayPal-branded card that is linked to their PayPal account to buy things in-stores.

Additionally, if a user does not have either their mobile phone or wallet, they could type in the PIN number from their PayPal account or their phone number to buy things.

Technologies such as bar code scanning will also play an important role for both consumers and merchants.

“Consumers are using mobile to fundamentally change how they are shopping and the line between online and offline transactions is getting blurred,” Mr.  Nayar said.

“The key will be using technology to ease the friction points for both consumers and retailers,” he said.

Final Take
Lauren Johnson is editorial assistant on Mobile Commerce Daily, New York