Toys”R”Us Trial Shows Brilliance—And Folly—Of eBay

Written by Evan Schuman
November 10th, 2011

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 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.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.