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Big Chains Bring PayPal In-Store

Written by Tom Ryan

PayPal has reached deals with 15 retailers, including Toys "R" Us, J.C. Penney and Barnes & Noble, that will allow consumers to pay for purchases with their cellphones as part of its promise to bring its service to physical stores.

The online payment system, owned by eBay Inc., is also now rolling out to 2,000 Home Depot stores, where it has been testing the service since January. While PayPal didn't land Target or Walmart, the diverse group of signups includes Abercrombie & Fitch, Advance Auto Parts, Aéropostale, American Eagle Outfitters, Foot Locker, Guitar Center, Jamba Juice, Jos. A. Bank Clothiers, Nine West, Office Depot, Rooms To Go, and Tiger Direct.

The in-store mobile payment process will allow customers to pay for purchases using only the mobile phone number associated with their PayPal accounts along with a PIN. The funds will be taken directly out of their PayPal accounts, as with a debit card.

"Consumers are relying on technology now more than ever to simplify their lives when it comes to shopping and paying, and retailers must adapt to this shift or risk becoming irrelevant," said David Marcus, president, PayPal, in a blog entry unveiling the new retail partnerships.

While PayPal is seen as an immediate threat to Google Wallet, mobile payments overall are considered a longer-term concern for major credit card companies due to the potential for lower service fees.

But in announcing its 15-store deal, PayPal largely played up its ability to provide greater access to customer data as the main incentive for retailers.

To deter credit card fraud, existing payment networks typically share little information with stores beyond the last four digits of a credit or debit card. Instead of credit card data, PayPal uses a customer's e-mail address to provide safer access to the actual name and other information on shopping habits, consumer locations, product preferences and recent product searches. That promises to help retailers send coupons and other offers to users' smartphones when entering a store rather than seeing discounts spat out upon POS checkout.

Such deals are expected to likewise entice consumers to switch from plastic to mobile payments.

"We're helping merchants connect with consumers at every stage in the shopping cycle," wrote Mr. Marcus. "Before they come into the store, while they're in the store, or even after they've left. We're able to drive consumers through a retailer's doors with relevant offers, coupons and discounts, then maintain a relationship with that consumer that keeps bringing them back to the retailer, in store or online."

PayPal also last week signed agreements with VeriFone Systems and Equinox Payments to get its payment technology onto their checkout terminal networks.

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