Evan Schuman's StorefrontBacktalk

Home Depot’s trial to let shoppers pay in-store with PayPal—a program confirmed late last week, which is loosely related to PayPal’s wallet—is interesting more for what it doesn’t do than what it does. It’s a baby-step program in two ways.

On the mobile front, it’s the first retail trial of PayPal’s mobile payment program and it doesn’t use a mobile device at all. (OK, that’s more an embryo step than a baby step.) On the payment front, this is also a test of Home Depot accepting a rectangular magstripe card that doesn’t say MasterCard, Visa, American Express, Discover or Home Depot on it.

Let’s start with the mobile part. When PayPal was demonstrating its wallet to retailers in November, it said that a major retailer was going to be testing the program and it would be announced by that retailer by the end of the year. That retailer was Home Depot. But it wasn’t announced by the end of the year (it came out January 6), and it wasn’t announced by that retailer (PayPal made the statement).

Much more importantly, it’s pretty hard to even say that what Home Depot is trialing is the PayPal wallet that PayPal was demonstrating. What the $68-million chain is doing is agreeing to accept—eventually—a PayPal magstripe payment card. That’s important—more on the payment potential in a moment—but it’s certainly not mobile, in the NFC wireless sense.

The mobile component is the part of the demoed PayPal wallet designed for shoppers who don’t have smartphones. It’s really an alternative way to authenticate a PayPal purchase by asking for a mobile phone number (which, theoretically, might not even be a mobile phone) and a PIN.

This approach does allow for one PayPal wallet feature: the consumer is able to make a payment associated with one card and to later log into his PayPal account and change it to something else. That’s a nice feature, but it shouldn’t impact Home Depot at all. After the retailer gets paid by PayPal, it doesn’t really care how PayPal gets paid.

(Related story: “Guess Google Wallet Experience: Great Interface, Hardly Any Customers”)

By Home Depot limiting itself to two non-mobile elements of PayPal’s mobile wallet, it not only bypasses any hardware changes to do the trial but it can find out how willing consumers are to use PayPal as in-store payment—in addition to learning whether those consumers are willing to reveal their mobile phone number as identification (plus a PIN).

To be precise, the trial that began last December at five Home Depot locations isn’t actually showing Home Depot how many of its consumers are willing to use the card—which will be called an Access Card and is still being designed. For now, it’s only finding out how many PayPal employees are willing to use the card, because they are the only ones being allowed to participate in the trial. (Let’s hope, for PayPal’s sake, that the percentage of employees using the PayPal card is really high. A low rate there would be really hard to explain.)

The initial plan is to open the program to Home Depot customers somewhere between April and June of this year.

One baffling detail is that PayPal’s brief statement said the Home Depot pilot “involves a small number of PayPal employees,” which PayPal later said was 400 employees. That’s not really that small a number. It’s not huge. Given that it is only five stores, though, it’s not tiny.