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PayPal’s In-Store Mobile Pitch Doesn’t Seem To Know Problems Even Exist

Written by Frank Hayes
September 21st, 2011

PayPal’s not-quite-a-mobile-payments-announcement on September 14 was a nearly perfect primer on how not to convince retailers you’re a serious player in in-store payments: Trot out a collection of rebranded (but unintegrated) technologies—everything from your own mag-stripe cards to self-checkout by phone to yet another nonstandard use of PIN pads—and then demo them without any hint that you recognize the unsolved problems they carry, never mind having solutions.

The problem isn’t just that PayPal has apparently done nothing to pull together its pile of recently acquired technologies into a suite of payment services. It’s that each of these services has real problems that have dogged retailers’ efforts at mobile payments for years. And astonishingly, PayPal doesn’t seem to have solved any of them.

Consider PayPal’s answer to NFC-equipped phones (what Google Wallet and ISIS and, if it ever materializes, Apple’s mobile-payment system all use). No NFC for us, PayPal says: Just type your phone number and a PIN into a countertop PIN pad to pay, and choose either a paper receipt or an E-receipt that’s sent to your phone.

What’s wrong with this picture? Yes, it’s less convenient than a card swipe or contactless tap, more prone to error and apparently more at risk for fraud, because anyone looking over the customer’s shoulder can capture all the information needed to make a purchase on the account. (One of PayPal’s recent mobile-payment acquisitions is Zong, whose system also sent a message to the customer’s phone to confirm the payment. Amazingly, if that’s part of the offering, it’s nowhere in the demo.)

But the real problem is the biggest hurdle faced by any new payment approach: This PayPal in-store play requires changing the retailer’s back-end software, which retailers understandably hate touching.

Google Wallet and ISIS will require back-end changes, too, along with new PIN pads. But they’re not claiming, as PayPal is, that they won’t require new infrastructure. Yes, back-end software is infrastructure.


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