PayPal, Paydiant to build retailer-centric mPOS

PayPal Inc., the payments division of San Jose, Calif.-based eBay Inc., revealed on March 2, 2015, that it is acquiring app developer Paydiant Inc. Established in 2010 and based in Auburndale, Mass., Paydiant is best known for developing CurrentC, a mobile wallet used by retail consortium Merchant Customer Exchange (MCX). PayPal will pay a reported $280 million for the deal, which is expected to close in late March or early April.

PayPal, which is expected to spin off from eBay and go public in 2015, said it will make Paydiant’s open platform available to retailers, banks and reseller distributors. Partners will be able to integrate the technology into mobile, online and brick-and-mortar retail environments.

The customizable platform is designed to support rewards, loyalty and customer relationship management programs, and to work with a variety of payment methods using multiple hardware platforms and operating systems, including iOS, Android, and Windows mobile phones.

Payment analysts stated they expect the PayPal-Paydiant mobile payments scheme to have a similar look and feel to CurrentC, which directly connects merchants and banks with customers, circumventing third-party payments intermediaries.

Inclusive, device-agnostic platform

In an interview with Bloomberg Media at the 2015 Mobile World Congress in Barcelona, PayPal Chief Product Officer Hal Ferguson said Paydiant’s open platform “gives merchants the ability to build custom mobile experiences on top of their own data,” which he expects will help merchants differentiate themselves from competitors.

When asked if the Paydiant acquisition will give PayPal exclusive access to the large group of merchants who formed MCX and the CurrentC mobile wallet, Ferguson stated that Paydiant provides MCX members with a flexible payments experience, which is something that PayPal “has always been about.”

He stressed that PayPal plans to support all forms of mobile payments, including Apple Pay, Samsung Pay and Android Pay, a practice he described as being consistent with the way PayPal operates its core business.

A 'post-POS' commerce play

In a Dec. 16, 2014, article in Mobile Marketing & Technology, Paydiant co-founder Chris Gardner predicted 2015 would mark a new era of “post-POS" commerce, in which payments play a lesser role in the overall consumer experience.

“Payments aren’t the only thing moving to mobile,” Gardner wrote. “The entire purchase experience is being transformed – see Uber, Subway Mobile Ordering, etc. Payment is only part of the transformation as we move into a ‘post-POS’ commerce experience. Consumers will spend less time waiting in line and more time using mobile to interact with their favorite retailers.”

Gardner cited the need for a fluid mobile wallet that’s adaptable to its environment. He predicted consumers will have one or two mobile payment apps they will use in many places and others they will use at favorite retailers. He also stated shoppers will base their preferences around ease-of-use, loyalty and incentives. “Consumers will want a choice in their mobile wallets – just like they do with credit cards, debit networks, gift cards and loyalty programs,” he wrote.

PayPal platform evolves from online to in-store

Ron Mazursky, Debit Advisory Service Director at Mercator Advisory Group, sees the Paydiant acquisition as a major step forward for PayPal in the brick-and-mortar retail space.

“This partnership provides PayPal an immediate entrée in the retail mobile payments community, where Paydiant is the established standard bearer,” Mazursky said. He went on to say that advances in encryption and tokenization have largely eclipsed PayPal’s original charter of protecting consumers during e-commerce transactions. “This partnership and mobile payments platform will give PayPal the opportunity to stay relevant,” he added.

PayPal’s Ferguson stated the company’s objective in operating a technology-agnostic platform is to provide the right tools for merchants to integrate payments into their environments, while giving consumers a flexible, open digital wallet they can use not only for credit and debit cards, but also for loyalty, points and rewards.

He added that other mobile wallet leaders will have a tremendous advantage when using the PayPal platform and expressed the hope that mobile wallet providers can collaborate in defining common standards for near field communication and other emerging payments technologies.

Editorial Note:

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

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