PayPal announced it is expanding a partnership with Google to make it easier for shoppers to pay from their PayPal digital wallets through Android Pay at retail stores, in-app and online.
PayPal said the new capability will be coming soon to Walgreens, Dunkin’ Donuts and other retailers, but didn’t further specify launch timing or other retailers by name. The PayPal integration with Android Pay will be supported on versions of Android OS 4.4 and higher, including KitKat, Lollipop, Marshmallow and Nougat.
PayPal EVP and COO Bill Ready, said in a blog post, “Initially, users will be able to pay using their PayPal balance and over the coming months we will add the ability to use cards that have been stored with PayPal, enabled by our recent tokenization partnerships with major card networks.”
This is being described as an extension of an existing partnership, though this is true only in pretty loose terms: PayPal and Google have only worked together to allow Android users to pay for apps in the Google Play store using PayPal. In early 2016, PayPal said it was committed to forging new partnerships in the name of advance digital payments, and it wasn’t just a lot of talk.
Over the last year, the company has partnered with many of the biggest players in payments and e-commerce, including Mastercard, Visa, FIS, Discover, Citi, Alibaba and Facebook, among others. PayPal very much needed these partnerships to happen. Every brand you can think of is pushing into the digital payments space that PayPal helped pioneer, but as that happens, the company doesn’t have an open path to in-store point-of-sale, and could use a boost in mobile payments as that market continues to attract attention.
So, why would payments players from Mastercard to Google want to partner with another member of the competitive crowd to help that company gain an in-store profile? Well, as Ready pointed out in his blog post, PayPal processed $102 billion in mobile payment volume and 2 billion mobile payment transactions in 2016. The strategic imperative for most payments players (really everyone except Apple), is to make at as easy as possible for the broadest possible range of consumers to use any digital wallet option they want to use. Plenty of them already use PayPal, and it makes more sense for Android Pay (or again, really anyone except closed-loop fan Apple) to help those consumers use PayPal in-store than it does to exclude them from the list of Android Pay payment sources.
PayPal will certainly be helped by aligning itelf with Android Pay, and Android Pay will in turn receive access to PayPal's active user base as it chases Apple Pay in the mobile payments market.
We keep getting reminded by surveys — most recently yesterday — that show retail mobile payments are still at an early stage. A lot of retailers don't support them, and many that do either aren't confident enough to take the step or don't know where to start. Presenting retailers with a market in which they can adopt something like Android Pay and still let customers use PayPal will make retailers feel like they are choosing a system that doesn't leave a large number of active digital payments users on the sidelines.