The problem is that the digital wallet concept—a place where you can cram in every payment method, CRM card and discount reminder—is the same, with trivial differences in partners and technology. PayPal did showcase some differentiators—such as the ability to pay with airline miles or other points programs, in addition to changing the payment method days after the purchase has been finalized—but it also conceded that there's nothing preventing Google or ISIS (or Apple or others) from offering identical services.
Some other interesting—although potentially temporary—PayPal differentiators include what PayPal Global Communications Director Anuj Nayar referred to as the "empty hand" payment method, where a customer who has gotten his or her phone and has no cards can instead type in his or her phone number and a PIN and pay that way.
That ability to change payment methods (from PayPal directly to perhaps a forgotten giftcard or a different credit card) afterwards is a nice touch, mostly because it's a helpful consumer feature that will not have any impact on the retailer. It also suggests that retailers will be able to enjoy various payment services in a mobile wallet environment, without having to do any meaningful changes to IT systems.
But that bypasses the crucial question: How is a retailer to choose among these digital wallets? PayPal's core answer is that its system is device-agnostic, as opposed to Google only using Android (for now) and ISIS offering nothing live now but is expected to be similarly hardware-limited. Apple has yet to weigh in one way or the other.
Not only will PayPal—assuming it ever gets any live trials made public, something that only Google has accomplished thus far—support all smartphones, but Nayar said it could support non-smartphones, too. That said, he conceded that functionality on non-smartphones would be very limited.I think it's fair to say that smartphones—defined these days as phones that can download third-party apps—are where this battle will be fought. As a practical matter, RIM's BlackBerry has opted to sit this out in the U.S., which is fine, given that it has not been on the list of mobile-payment partner candidates—or even the list for mobile-site-optimized platforms—for most retailers for quite some time.
That really leaves Android and Apple. As the owner of Android, Google has a lock there, and Apple still hasn't shown its hand. Apple may cut a deal with Google or it may make its own move, which could make it the player to beat.
PayPal is correct that it's the only currently discussed option that can process digital wallet payments through Android, Apple and BlackBerry.
It's a strong argument, but it's sharply hampered by the calendar. Google has multiple public trials active right now. PayPal has none now and is promising to have a single national retail partner by the end of this year (mostly likely this month, probably to go live right before Thanksgiving). Given the trial is unidentified, that doesn't give much of a push—nor does the fact that it's just a single chain.
More at issue is that Apple will likely make its move within the next several months. Because of the slow PayPal rollout, retailers will have the luxury of sitting back and waiting to see what Apple does before making any firm decisions.
Smaller chains—plus tons of mom-and-pop single-location retailers—will have an easier time. And PayPal's device-agnostic pitch could make it a strong force there, with Google focusing much more on the major national chains. PayPal's popularity with smaller retailers, especially online, could also prove critical. In turn, that could help PayPal build out the rest of its infrastructure with thousands of small shops across the country.
Until then, PayPal's pop-up will be making its pitches among the bundled holiday shoppers for several more weeks. One of the demos—which PayPal calls vignettes, most likely because that was what was needed to get the professional actors to participate (performing a vignette goes on a resume, doing a demo doesn't)—had an interesting moment.
The presenter is pointing out the joy of having completed a digital transaction of a barbecue grill at a hardware store, all without a sales rep bothering him with upsell attempts. But within a minute, he's pointing out that the app is now flagging some important grill accessories that he should really consider adding to his purchase. Yes, why have an annoying sales associate trying to upsell you when your iPhone can do it instead?