PayPal testing NFC option as Q3 eBay split approaches

PayPal (NASDAQ:EBAY) hasn't always been a believer in near field communication technology, but on the heels of positive growth announcements for the first quarter of 2015, CEO-elect Dan Schulman confirmed that the payments company is testing an NFC solution of its own.

The news came in the midst of eBay's earnings call for the first quarter of 2015, in which PayPal once again underlined its rapid growth. Revenue for the company as a whole rose 4 percent, but the online marketplace side fell 4 percent while PayPal's revenue rose 14 percent. The marketplace business brought in $2.07 billion, compared with $2.10 billion for PayPal, marking the first time sales for the payments business have surpassed the marketplace business.

Moving forward, Schulman said PayPal is testing out NFC, somewhat softening the company's past stance that NFC would burn out. The success of Apple Pay's (NASDAQ:AAPL) NFC-based system has surely factored into that change of heart, but Schulman also reiterated his belief that the platform should remain technology agnostic to allow for greater flexibility.

"Even though NFC is starting to gain some momentum, it's still probably 2-5 percent of the point-of-sale terminals out there in the marketplace, maybe more on a transactional basis. But it's a small part, and I've seen many times where one technological standard is going to be merged and it's eclipsed by something else," he explained on the earnings call. "So what I would like the PayPal platform to be, and what we're building towards—and have a lot of capabilities already—is the ability to utilize your mobile phone but not just via NFC, but QR codes, Bluetooth, HCE. Really it depends on what the merchant has upgraded towards."

He explained that a change between swiping a card and tapping a phone is fundamentally just a difference in form factor, simply substituting one action for another and not substantively improving the process itself. Rather, he hopes PayPal can continue to explore offerings that enable to merchants to actually learn more about their consumers using loyalty, couponing and other strategies, while also letting shoppers pay with the methods they prefer.

"Everything we've done in the first six months of my tenure is positioning PayPal to take advantage of what I see as one of the greatest opportunities for growth that the payments industry has ever seen," Schulman added. "We have a lot to execute on; I'm excited about where we are, what we are building and about PayPal's strong position and potential in this dynamic market."

PayPal has, in the past, taken a pretty hard stance against the long-term value of NFC technology. Back in 2012, then President David Marcus listed "NFC will fail to gain mass adoption" as one of his top predictions for 2013.

The company appears to be considering all of its options as it moves toward a split from eBay as an independent company. John Donahoe, president and CEO of eBay, confirmed that the divorce is scheduled to happen in the third quarter of this year.

For more:
-See this NFC World story
-See this Pymnts.com story

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