Through VeriFone, PayPal Arrives at the Mobile POS

PayPal Inc. took another step toward the physical point of sale on Tuesday with the announcement that it will work with VeriFone Systems Inc. to let merchants accept PayPal payments on VeriFone’s PAYware Mobile application. Starting early next year, merchants will be able take PayPal from customers on the application, which VeriFone introduced early this year to allow mobile merchants to accept major card brands on Apple Inc.’s iPhone.

The announcement was one of a number of mobile-payments developments that emerged from PayPal’s Innovate conference for developers, which the eBay Inc. unit is holding in San Francisco starting Tuesday. Other announcements included the introduction of Mobile Express Checkout, which allows consumers to remain logged in to PayPal for payment while working with different apps, and an iPhone app that locates nearby merchants that accept PayPal. The app also lets those merchants send discounts and other deals to entice users to come into their stores. The app, a new version of PayPal Mobile for iPhone, is available for now in beta for the San Francisco Bay area and allows payments with PayPal and Bling Nation’s contactless Bling tags.

PayPal said its PayPal X platform, which it introduced nearly a year ago as an open platform for software developers, has attracted 50,000 developers who have launched almost 1,000 applications.

PayPal’s tie-in with VeriFone is not the first time the e-commerce processor has worked with its neighbor in San Jose, Calif., to reach the physical point of sale. Last month, VeriFone said it would supply terminals for Palo Alto, Calif.-based Bling Nation that would let consumers make Bling transactions that can tap PayPal accounts (Digital Transactions News, Sept. 22).

But the latest deal adds PayPal acceptance to a VeriFone mobile app that up to now has supported only card swipes. As part of the agreement, VeriFone will unleash its network of more than 400 independent sales organizations and software resellers to sell PayPal to merchants who are current or potential users of PAYware Mobile. “Discussions [between VeriFone and PayPal] have been going on for a while,” says Paul Rasori, senior vice president of marketing at VeriFone. “It seemed obvious to both of us a partnership would be required at some point given PayPal’s direction in bridging into the brick-and-mortar world.” As a result of the agreement, VeriFone has become “the first device manufacturer to join the PayPal developer ecosystem,” says a PayPal spokesman.

In a later phase of the deal, which Rasori says could be introduced some time before the middle of next year, PayPal will market PAYware Mobile to PayPal merchants who conduct face-to-face sales as well as e-commerce. One such market, Rasori says, could include eBay sellers who also hawk their wares at street fairs and trade shows. In this phase, PAYware Mobile will enable direct card payments for sellers who have PayPal accounts but may or may not have merchant accounts.

In addition to the mobile app, PAYware Mobile includes a special sleeve that fits onto the iPhone and allows for card swipes, as well as a connection to PAYware Connect, VeriFone’s transaction gateway. The gateway, which VeriFone sees as critical to its strategy to build recurring revenue, will handle transactions for both the earlier and later phases of the PayPal deployment. Rasori says he can’t comment on gateway pricing for PayPal transactions or card payments made on PayPal accounts.

To complete a PayPal transaction, a merchant using PAYware Mobile will use the so-called bump technology that transmits data from one smart phone to another when the two devices touch. PayPal introduced bump in March as part of its mobile app. If the consumer doesn’t have bump, the merchant can hand over his phone and have the consumer enter his PayPal credentials on a special screen.

Though PAYware Mobile supports only the iPhone for now, VeriFone says other smart phones, possibly including BlackBerry models and phones powered by Google Inc.’s popular Android system, are “on the road map.”