Eye on M-Commerce: Google Talks to eBay; Apple Hires NFC Expert

In a move that could generate significant incremental sales on its Android Market, Google Inc. is reportedly in talks with eBay Inc. about using PayPal as a payment method for applications that run on its hugely popular Android operating system for smart phones. But the talks aren’t likely to open eBay’s massive auction marketplace to Google Checkout, observers say.

If the talks bear fruit, users of Android-powered handsets could begin using eBay-owned PayPal to buy apps before the year is out, according to Bloomberg News, which reported the discussions on Monday, citing a trio of unnamed sources close to the negotiations. Contacted by Digital Transactions News, a Google spokesperson refused to comment on the matter. An inquiry to eBay was not answered.

Currently, the Android Market accepts credit cards and Google Checkout, an online wallet Google introduced in 2006 that stores credit card details for users and streamlines transactions. By taking PayPal, the storefront would get access to 87.2 million active account holders, allowing it to compete more effectively with Apple Inc.’s App Store, which uses Apple’s highly efficient iTunes billing system for payments.

While Android phones have skyrocketed in popularity over the past year, the Android Market still lags well behind the App Store, with 70,000 apps versus 225,000. “At an app store, it might be advantageous to offer PayPal because it doesn’t depend on an existing payment method directly,” says Beth Robertson, director of payments research and consulting at Javelin Strategy & Research, Pleasanton, Calif.

While Google Checkout streamlines checkout by storing payment and shipping details, it is limited to existing credit card accounts. PayPal, by contrast, works not only through cards but also the automated clearing house network. Checkout also lacks the popularity and reach of PayPal. “To the extent it can help with closing more app downloads, it’s a good deal for [Google],” says Menekse Gencer, a former PayPal Mobile executive and founders of mobile-payments consultancy mPay Connect.

But it’s less clear whether Google could turn the tables, using the negotiations to get Checkout accepted as a payment method on eBay. The online auctioneer has excluded Checkout since the service was introduced, a stance many observers have attributed to eBay’s desire to protect PayPal from a potentially powerful competitor. While Checkout has struggled to meet its early expectations, experts doubt eBay’s stance has changed. “I could see where [Google] would try to negotiate that, but I don’t see where they’d be successful,” says Robertson.

In other news, it emerged over the weekend that a leading expert in near-field communication (NFC), a key technology used for contactless payments based on embedded wallets in mobile phones, has joined Apple Inc. The move triggered speculation that Cupertino, Calif.-based Apple, which filed a raft of NFC-related patent applications last year, is stepping up plans to add NFC capability to its mobile devices.

According to his LinkedIn profile, Benjamin Vigier became product manager for mobile commerce at Apple last month. He was most recently an executive at mFoundry Inc., a Larkspur, Calif.-based provider of mobile-payments and –banking software. Before that, he was at Bouygues Telecom in Paris. At mFoundry, he “conceived and managed” the Starbucks Coffee Co. mobile card product and an app for PayPal Mobile, according to his profile. Inquiries to both Apple and mFoundry were not answered.

Speculation about Apple’s plans in NFC led to the expectation that its latest iteration of the iPhone would include NFC chips. That expectation was dashed when the gadget was launched this summer without NFC capability. This spring, however, the U.S. Patent and Trademark Office made public at least eight patent applications the company had filed that would cover various aspects of NFC. One of these applications, filed nearly a year ago, contemplates a system for a so-called smart menu that would link to an NFC transaction and an e-wallet. For each transaction, the menu would present to the user the payment method offering the most rewards, or the one with most open-to-buy, or the one with the most stored value—all depending on preferences set by the user.