PayPal Inc.'s relatively recent acquisitions have given it an approach to mobile payments that differs from mobile solutions offered by Google Inc., Visa Inc. and MasterCard Worldwide.
PayPal, an eBay Inc.-owned company, reported its mobile wallet payment solution requires no new hardware or infrastructure, and its technology not only allows merchants and consumers new payment opportunities, but it also offers the ability to give and receive coupons, special offers and instant credit.
Analysts believe near field communication (NFC)-based mobile wallets are at least three years away from general acceptance because merchants still need to adopt new technology to accept NFC payments. PayPal, on the other hand, recently demonstrated it is ready to start processing mobile payments now. When the company's mobile program launches, consumers will need only a smart phone, a PayPal account and a PayPal PIN to start making purchases from their phones.
Paypal President Scott Thompson introduced what he called "the future of shopping" on his PayPal blog in September 2011 after a technology demonstration in Los Angeles. "We gave merchants a sneak peak at PayPal's new payment technologies that will help give their customers a much better shopping and buying experience through PayPal," he said. "And let's be clear about something - we're not just shoving a credit card on a phone."
In addition to facilitating both mobile and POS payments, the PayPal-owned technologies also enable targeted mobile advertising, bar code scanning and an inventory availability check. In short, the PayPal payment system is a virtual wallet requiring no additional hardware or infrastructure support, according to PayPal.
"The fact is you've got to have more than just a shiny new technology to really change the way people shop and pay," Thompson said. "We all know that shopping is fun, but paying is not. Nobody likes to stand in line. Nobody likes waiting for their bill at the restaurant. ... The act of paying for something should be as seamless as your decision to buy it. The future is about creating real consumer choice, flexibility and control over how people shop and pay."
PayPal allows consumers to pay at a POS terminal using a phone number and a PayPal PIN. Consumers can also choose to use a PayPal plastic card that can be swiped at a terminal, has no visible account information and uses a PIN much like a debit card.
In a different shopping scenario, the consumer can scan a bar code on an item to see if it is in stock or where else it can be purchased and at what price, PayPal reported. Merchants will be able to target customers with advertising offers and send coupons to consumers in nearby locations. Merchants also will be able to interact online with consumers.
Consumers will be able to apply online for credit to buy big-ticket items such as appliances or electronic devices and receive immediate decisions, along with payment installment schedules, according to PayPal.
This array of convenient payment, advertising and credit technologies was not developed by PayPal. It was acquired. The first in a string of strategic buys was the purchase of Bill Me Later Inc. in October 2008. Bill Me Later technology allows consumers to check out without using a credit or debit card. Bill Me Later substitutes a phone number and PIN for the card swipe.
In December 2010, PayPal purchased Milo.com Inc., a product location and information company. "Milo shows you what's in-stock where and tells you how much it costs at that very moment," the Milo.com website states. "We also offer detailed product information and user reviews, so you can be confident you're getting a product that fits your needs."
In April 2011, PayPal purchased Where Inc., a Boston-based location media company. Where develops location-based services including mobile advertising and search and recommendation applications. According to the company, it has more than 4 million users, as well as Where Ads, a hyper-local search and display mobile ad network that has connected with more than 50 million consumers.
The last piece of PayPal's technology puzzle was acquired in July 2011. Zong Inc. built its reputation on its social gaming platform, virtual world companies, digital products and Facebook Inc. Zong has more than 250 mobile carriers in its network, which allows consumers to elect to have payments go on their phone bills. Potentially, this gives Zong access to 3.2 billion mobile phone users.
Knitted together, Bill Me Later, Milo.com, Where, and Zong may be giving PayPal a head start in the mobile payments market while Google Wallet and similar electronic wallet services wait for wider adoption of NFC technology.
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