Merely two weeks after acquiring Braintree, PayPal made the announcement about Payment Code Technology, on 8th October 2013 at Money 2020 conference held in Las Vegas. Through this initiative PayPal offers a feature that enables customers to make in-store payments using a QR code generated by an app on a customer’s smartphone. Is it something new in the market? How does it gel with other stuff Paypal is doing for in-store purchase such as BLE beacons and facial recognition.
The payment process can be split into a few steps:
When the customer is at the merchant’s location ready to be checked out, he opens the PayPal app on the smartphone.
The app prompts the customer with a QR code, or a 4 digit short code.
The merchant either scans the QR code or the customer enters the 4 digit number into existing card swiping terminal, to complete the purchase.
The Payment Code is an extension of the company's offerings aimed at enhancing in-store payments according to PayPal. There is a basic premise that we have, which is that you are not going to change behavior in the retail store sector very quickly, said Don Kingsborough, VP of Retail, PayPal. The company has entered into partnership with large retailers such as Discover Financial Services and Home Depot.
The commission that PayPal will get out of these transactions is currently being negotiated on a case by case basis according to Kingsborough. The advantage PayPal claims is that by developing the system on an app and not physical hardware, they could upgrade to include Bar-codes and other authentication services.
In 2013, PayPal has rolled out number of services including its Restaurant app, Facial Recognition, and recently the Beacon. Payment Code is the third part of the puzzle that will let PayPal users pay with their phones easily, said Kingsborough. The four-digit number will be the dominant way to complete these mobile payments because there are so many card swipe number pads already installed in stores. PayPal also recently unveiled plans to enable Payments in Space.
LTP View: With this new QR code enabled technology, PayPal hopes to get better in the in-store mobile payments space. The service is set to be launched in early 2014. Overall Paypal is not leaving any stone unturned and is trying out various enabling technologies, acquiring companies and making a big mobile payments splash.