Evan Schuman's StorefrontBacktalk

Toys “R” Us is backing into in-store mobile payments by serving as the guinea pig for an interesting eBay trial. Smartphone-equipped toy shoppers will be able to purchase any Toys “R” Us product by scanning the barcode with RedLaser, now owned by eBay, with the mobile app fully processing the transaction. There’s a huge catch, though: Any payment form other than eBay’s PayPal need not apply.

eBay has been coy (a nicer way of saying “misleading”) about its payment limitation. On November 3, eBay posted a description of its Toys “R” Us trial on its blog. In that piece, eBay wrote that, with the Toys “R” Us trial, “you can even pay with PayPal.” It slipped company’s execs’ minds to have said, “you can only pay with PayPal.” (We can see the commercials now: “During the Toys “R” Us trial, 100 percent of consumers chose to pay with PayPal. Amazing how popular a choice it is when consumers have no alternative.”)

The shortsighted payment limitations aside, this Toys “R” Us trial is quite clever and it showcases what eBay can do in the mobile space. Consistent with the mobile wallet pitch PayPal itself is making to retailers, parent company eBay’s trial showcases the strength of being platform-agnostic. This trial can work just as well on an iPhone or an Android. (Note: eBay’s information seems contradictory on how multi-platform it will initially be, however.) On the flip side, Google Wallet can work just as well on Visa and MasterCard.

Therein lies the frustration of the Toys “R” Us trial. If eBay had just permitted multiple payment sources—and not tried to leverage the wallet to boost PayPal fees—this app could have forced some serious mobile shakeup.

This is how eBay’s blog post described the Toys “R” Us trial: “If you scan or search for a toy, RedLaser will bring back its standard set of results, but if Toys “R” Us has the item, you’ll be able to buy the item directly from within the app, whether it’s available through Toysrus.com or one of their local stores. You can even pay with PayPal. This means we’re not just handing off the customer to a merchant, but closing the loop on the whole transaction.”

In other words, this app would be impressive were it merely a way for people inside one of the 875 Toys “R” Us stores. To effortlessly move from scanning a barcode for price comparison to being able to complete the transaction on the phone—no need for POS checkout at all—is powerful and puts the chain way beyond other retail trials. But this app will also work at Wal-Mart, Target or in some obscure mom-and-pop store on the boardwalk. Anywhere the toy exists becomes a sales showroom for Toys “R” Us. eBay is promising to announce other retailers soon. For Toys “R” Us, though, the fewer toy-selling retailers on the list, the better.

There are lots of questions raised by this app—which we’ll address in a moment—but the power of the idea is stunning. And the shortsightedness of whoever approved limiting the payment choices to PayPal is equally stunning. Given the domination in the payment space of the combination of Visa, MasterCard and American Express, the idea to exclude any customers who happen to not have—or who don’t want to use—PayPal is mind-boggling.