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PayPal Is Touting Everything Mobile It Can, Except Shoppers Using It

Written by Frank Hayes
January 16th, 2013

Sometimes, it’s what is not talked about in a news release that is much more informative than what is. Consider PayPal. On Monday (Jan. 14), the eBay subsidiary named 21 chains signed up to offer brick-and-mortar PayPal (along with two more chains too shy to be identified) and said its system is now available in 18,000 store locations. That’s the good news: PayPal is now the most widely available U.S. mobile-payments provider, with more stores using it at POS than even the very successful Starbucks approach.

The bad news: PayPal has said nothing whatsoever about how many shoppers in all of these stores, plus Home Depot, JCPenney, Abercrombie & Fitch, Toys”R”Us, Foot Locker and Barnes & Noble, have actually used the service. And of those who did, how many came back to use it again? How many dollars are shoppers pushing through the retail PayPal system? You know that if those figures were anything less than humiliating, they’d have been released by now.

It’s no shame that many of those chains are only offering it in a very small number of their stores. But by stressing the names of the chains, is this a PayPal tactic at play? Is PayPal scrambling to get its users asking for PayPal in stores that don’t have it yet, in order to pressure the chains to get it running and promote the service?

You might think so from the announcement, in which PayPal in-store chief Don Kingsborough lists the five new signees (Dollar General, RadioShack, Famous Footwear, Mapco Express and Spartan Stores) along with the 16 previously signed chains, and then tells PayPal users, “If you haven’t tried PayPal in store yet, please be sure to check it out.”

If PayPal users actually were to start demanding PayPal in-store at chains where it’s not yet completely (or even a little) rolled out, that might help break the chicken-and-egg stalemate that has dogged mobile payments: Chains won’t promote pay-by-phone until customers clearly want it, and customers won’t use it if stores don’t seem to have it.

So why does PayPal’s announcement smell of flop sweat? Because even with 18,000 locations equipped to accept it now, we’re not seeing any indication that there are even 18,000 customers actually using the system. That means there are nowhere near enough to move the needle for chains dragging their feet on this. It also means an “ask for it by name” appeal has to be a long shot, at best.

Kingsborough has reason to be nervous, even with no direct mobile-payments competitors nipping at PayPal’s heels (Google Wallet and Isis have even fewer locations and customers, and MCX has nothing to show yet). The problem is that Starbucks has gotten this to work. Not just technically, but where it matters: customer acceptance. Starbucks pushed its stored-value-card-on-your-phone approach hard, and customers gulped it down hard.

That means there must be a secret sauce hiding out there somewhere. PayPal just can’t find it—possibly because the sauce is actually just a decision on a chain’s part to push mobile payments even if it generates complications that cost associates real money.

If retailer commitment and promotion is the essential ingredient, and retailers keep taking a wait-and-see stance, mobile payments will continue to go nowhere.

Except Starbucks, of course. And considering how much time most retail IT execs spend there, you’d think they’d have figured it out by now.


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2 Comments | Read PayPal Is Touting Everything Mobile It Can, Except Shoppers Using It

  1. Anuj Nayar Says:

    Its Anuj from the PayPal team here. I just wanted to address some of the points you raised in your article. We have made it crystal clear that 2012 was a test & learn year for our in store initiatives. 2012 was focused on creating product experiences that solve real customer problems – not technology for technology’s sake. We are already a part of the SBUX mobile card app for automatic top up and its incredibly successful. The “secret sauce” is that you get mystarbucks reward points and your 12th coffee is free. It a loyalty play not a convenience play.

    Our solutions are all created to help retailers ease the friction points between them and their consumers – be it skipping the line (Jamba Juice); loyalty (SBUX); empty hand payments, gift cards and coupons (HomeDepot and others) or other friction points.

    We have deliberately help back on direct to consumer marketing until PayPal is available at more places that customers want to shop. That’s happening very quickly and it will continue to grow to millions of locations in 2013.

  2. intrigued at the concept Says:

    Doesn’t accepting PayPal in-store make it easier to return web merchandise purchased via PayPal to the brick and mortar location? With such a high return rate for web purchased products, maybe this will help drive the PayPal expansion.

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