PayPal Trespasses On Credit Cards' Turf With Mobile In-Store Sales

paypal retail

Photo: Dylan Love

PayPal is asking people to get off the couch, change out of their bathrobes, go outside, and shop.The online-payment service announced a deal with 15 new national retailers on Thursday that will allow consumers use their smart phone at the register. Consumers can use a pre-paid card and PIN or a phone number and PIN.

Participating retailers include Abercrombie & Fitch, Advance Auto Parts, AĆ©ropostale, American Eagle Outfitters, Barnes & Noble, Foot Locker, Guitar centre, Jamba Juice, JC Penney, Jos. A. Bank Clothiers, Nine West, Office Depot, Rooms To Go, Tiger Direct and Toys “R” Us.

Ad Age notes that this a “coup for the online-payment service, which is now finding its way to the register to compete with credit cards such as Visa, MasterCard and American Express.”

But, apart from when consumers leave their wallets at home, what will motivate them to use a phone instead of a credit card?

“Perhaps the biggest challenge facing anyone in the mobile payments space is the shift in consumer behaviour required,” Wilson Kerr, vp of business development and sales for Unbound Commerce, told Mobile Commerce Daily. “After all, how hard is it to take a card out and swipe it?”

So PayPal will have to roll out some pretty attractive promotions and loyalty rewards.

Still, Kerr is optimistic. “The opportunity is huge. Juniper Research recently predicted that mobile payments will grow from $240 billion this year, to $670 billion in 2015, and there is fierce competition for the transactional percentage points skimmed off by whoever wins the race with a solution that is embraced by both consumers and retailers alike.”

This is a popular new move. Groupon is testing a mobile payment offering to compete with Square (and now PayPal), too.

PayPal recorded $7 billion worth of mobile payments this year.

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