PayPal’s Brick-and-Mortar Payment Solution Beats Google to the Punch

For the first time, a major online payments processor is entering the brick-and-mortar realm. While Google (Nasdaq: GOOG) had wanted to be the first provider to allow in-store mobile payments via Google Wallet, that did not work out (see below). Instead, PayPal’s (Nasdaq: EBAY) new payment solution allows users of its mobile app to scan a QR code or type a PIN number at the point of sale to authenticate purchases. Currently, most PayPal transactions at brick-and-mortar retailers now are conducted through stored credit card and PayPal account information. And PayPal is not wasting any time in getting retailers involved in its new payment scheme. After a trial in Australia earlier this year, PayPal expects some merchants to begin using the service this year, and will add more next year. Millions of stores worldwide will be able to download the software into their existing cash registers in the near future, PayPal’s Vice President of Retail Don Kingsborough said this week. Even though PayPal’s owner, eBay, recently purchased Braintree Payments, we didn’t expect to see a brick-and-mortar solution this soon. The Braintree deal allows the e-tailer to include offline payments and person-to-person payments in its mobile app. eBay executives project mobile commerce transactions for PayPal to amount to $20 billion in worldwide payments this year, in addition to the impressive $20 billion in mobile commerce transactions for eBay. With its latest brick-and-mortar move, PayPal is likely trying to stave off competitors such as Google Wallet and Square. In-store mobile payments was originally the central feature of Google Wallet, and it depended on a near-field communications (NFC) chip inside the phone. However, initially there were a limited number of phones with an NFC chip (more phones have them now, but iPhones still don't). Then, the three largest U.S. mobile carriers formed Google Wallet's biggest NFC-payments rival, Isis, and refused to let their customers use Google Wallet.

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