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In a bid to streamline its payment process for online retailers, PayPal Inc. is testing a service that lets users pay and check out without leaving the merchant’s site.
Dubbed “in-context checkout,” the service, which is designed to work on tablets and mobile phones as well as laptops and desktops, is in pilot tests with a handful of unnamed major merchants. General availability is expected for other large merchants by the middle of the year. “Of course, we plan to roll it out to small and medium-sized merchants very soon as well,” Don Kingsborough, vice president of retail services at PayPal, says in a company blog entry posted Sunday.
Meanwhile, PayPal’s initiative to process payments for brick-and-mortar retailers has reached 1.9 million U.S. locations, Kingsborough said in the same post, from a standing start just two years ago. The program is supported by a number of major acquirers and routes transactions through the Discover Network.
The post also revealed that PayPal is working with both Discover and Micros Systems Inc., a Columbia, Md., vendor of retail software, to support payment code, a technology PayPal introduced last fall to let smart-phone users generate quick-response (QR) codes or use a four-digit short code to access their PayPal accounts. An unspecified number of merchants that use Discover and Micros software will be able to do a terminal upgrade to accept payment codes starting next month, the blog post says.
The in-context payment service should boost online merchants’ conversion rates, PayPal says. It comes after years in which PayPal merchants have seen customers leave their sites to log in with PayPal to make payment. In too many cases, the process leads to abandoned carts, experts say, as customers switch to other sites.
In other cases, they may simply switch to other payment methods, such as credit cards, that they can use while staying on the merchant’s site. That may preserve a sale for the retailer but costs PayPal a potentially fee-bearing transaction. PayPal’s margins on transactions exceed 60%.
“This is a huge, huge step” for PayPal, says Adil Moussa, principal at Omaha, Neb.-based payments consultancy Adil Consulting. “They need that traffic. It’s just a lot of lost revenue for them to not have that integration.”
With the new service, a PayPal user will be able to click on a button called “Checkout with PayPal” to log into his account while remaining on the merchant’s site. When logged in, the user will be able to confirm shipping and payment details and click to pay. A service called “Log in with PayPal,” expected later in the year, will allow the user to log into sites with her PayPal credentials, eliminating the need for her to log into her account when it’s time to check out. Retailers may adopt either of the services or both, a PayPal spokesman tells Digital Transactions News
The in-context payment service stems from comments PayPal has received from both consumers and merchants, the spokesperson says. “We want to continue to evolve our products,” he says. “We want to make purchasing easy and help merchants sell more.”
For the quarter ended Sept. 30, PayPal had 137.4 million active accounts doing $43.8 billion in transactions. Its transaction margin for the quarter was 63.4%. Parent company eBay Inc. will announce fourth-quarter results on Jan. 22.
