PayPal Prepares for a Rich Mobile-Commerce Harvest

Already claiming to be the leader in mobile payments, PayPal Inc. on Thursday announced it had optimized its Express Checkout service for mobile devices. The new mobile service caps a busy week for PayPal that included the disclosure that alternative-payment provider Bling Nation Ltd. is developing a PayPal application. PayPal also added a feature to its new Adaptive Payments service that lets consumers pay merchants with a credit card while within an application, regardless whether the consumer has a PayPal account (Digital Transactions News, June 29).

Like the existing Express Checkout, PayPal’s new Mobile Express Checkout is aimed at online merchants that already have a payment card merchant account but want to add PayPal as an acceptance option. Mobile Express Checkout has the same pricing as Express Checkout, 2.2% to 2.9% of the sale plus 30 cents for merchants with $100,000 or less in monthly sales; micropayments, sales of less than $10, are charged 5% plus a nickel.

With the optimized Express Checkout service, mobile merchants get a better user experience on their smart phones or other mobile devices, according to Anuj Nayar, San Jose, Calif.-based PayPal’s director of global communications. The first iteration of Mobile Express Checkout is adapted for Apple Inc.’s iPhone and Google Inc.’s Android 2.0, an increasingly popular mobile-device operating system with merchants. Nayar says PayPal will adapt the new service to the other major mobile platforms, including Microsoft Corp.’s Windows Mobile and that used by Research in Motion Ltd.’s BlackBerry.

PayPal identified test merchants as Buy.com Inc., which is already using the system, and Nike Inc., which will implement it soon. Mobile Express Checkout will be available to PayPal’s other merchants later this summer.

The optimized service puts PayPal in a position to capture even more mobile transactions than it already is as payments through smart phones and new devices such as Apple’s iPad explode. The eBay Inc. subsidiary says it has been offering mobile payments since 2005 and processed $25 million in such payments in 2008, $141 million in 2009, and expects to exceed $500 million this year. More than 5 million PayPal users will be using mobile devices for PayPal transactions, Nayar adds. “This is the next great step for us to open it up for users to shop on the mobile Web,” he says. “The time has come for mobile purchases.” Nayar would not break down the existing mobile volume into person-to-person payments and on- and off-eBay merchant sales.

A study released this week by the National Retail Federation’s Shop.org e-commerce division and done by Forrester Research Inc. says surveyed retailers are generating only 2% of their online revenues through mobile devices or applications. Earlier this year, Cambridge, Mass.-based Forrester forecast that U.S. online retailing would generate $173 billion in revenues in 2010. Thus, mobile commerce may be in line to produce $3.46 billion in payment volume.

Many retailers have done little to promote m-commerce, but that seems likely to change soon. Only 2% of 59 Forrester’s responding retailers said they had “easy payment options” when asked about what kinds of information and alerts they offer customers on their mobile applications or mobile Web sites. When asked about what kinds of new information and alerts they planned for 2010, however, 24% mentioned “easy payment options.”

Meanwhile, the Bling Nation payment system, which recruits local banks and merchants to create closed-loop merchant networks with customers paying via mobile phones, disclosed that it is developing a PayPal application through the new PayPal X platform for third-party software developers. Bling is testing the application in Palo Alto, Calif., where it is headquartered. The application is notable because it’s a departure from Bling’s locally focused model so far, and it also represents a major extension of PayPal, the king of e-commerce, to the physical point of sale.

On that latter point, Nayar says Bling, not PayPal, is leading the way. PayPal has consistently denied it has intentions on traditional POS payment processing. “They came in through that [PayPal X] door,” Nayar says. “We’re very interested to see what they do with that, but it’s very early stages.”

Nayar notes that LiveOps Inc., a call-center outsourcing firm, got PayPal into the payroll business by using a PayPal app to pay several thousand temps working for a fundraiser sponsored by the American Idol television show. “PayPal X takes us into all sorts of areas that we weren’t in before,” he says.