EBay is determined to lead the charge into NFC-enabled mobile payments via its PayPal unit, sensing the moment to create a full online/offline platform and see off rivals like Google forever. The company has made a string of acquisitions to support its aim, most recently Zong, and has now unveiled a service that supports peer-to-peer payments by tapping two Android handsets together.
In moving into physical payments, PayPal is also going up against Visa and the other card processors, which have their own m-payments strategies. The eBay offering shows the influence of Google, since it will make its debut on the Nexus S, the Samsung-made Google phone, which despite low market uptake has acquired a role as a showcase for new applications and Android features.
The last release of the operating system gained support for NFC, including ‘bumping’ to exchange data or carry out transactions by touching two phones together – reports Caroline Gabriel.
The new eBay function will be offered more widely as NFC is included in more Android handsets, said Laura Chambers, senior director of PayPal Mobile, in an interview. It will also be extended beyond the US at a later date. But she stressed to Bloomberg that NFC was not the only technology in the evolution of payments, despite the excitement – and carrier support – around it.
“There are a lot of technologies evolving around mobile payments, and NFC is just one of those,” she said. “What we’re doing is testing out NFC. We’re getting it into the markets, we’re getting it into the hands of consumers and we’ll see how it goes.”
PayPal now has 8 million users conducting transactions on mobile devices, Chambers added. Its latest service is an upgrade to an earlier contactless payment tool based on the inventions of Bump Technologies. The latest app works through a PayPal widget which allows a user to request or send money from a bank or PayPal account, with security based on PIN numbers.
Interestingly, as well as bypassing banks and card processors with its peer-to-peer approach, PayPal is avoiding, for now, the debate over NFC security mechanisms. Transactions use an encrypted token and do not access the secure element inside the NFC chip, where payment credentials are stored. Another issue is how PayPal monetizes its service – as in its online offering, it makes little revenue from peer-to-peer payments.
In a blog, Chambers says: “We’re seeing staggering growth in PayPal mobile payments, showing a real consumer desire for the way they shop and pay to catch up with the way we live. But at PayPal, we’ve said all along that consumer behaviour won’t change unless we’re able to offer an experience that’s truly better than what’s available today. We’ve been looking at NFC technology for a while and we saw a tremendous opportunity to combine the best of NFC and the best of PayPal.”