PayPal tests new NFC mobile payment app

Dec. 18, 2011 | by James Wester

Even with PayPal's recent addition of a P2P feature on its mobile app using near field communications (NFC), the company has conveyed a less than bullish attitude about the technology. Earlier this year, John Donahoe, CEO of PayPal's parent company eBay, dissed NFC by saying the acronym stands for "not for commerce," and NFC was notably absent from the offline strategy PayPal unveiled last month.

But it looks like PayPal isn't completely opposed to NFC for offline commerce.

PayPal has announced today that it will be testing a new NFC mobile payment application in Sweden over the Christmas holidays to bring NFC payments to the point of sale. As a part of the test, PayPal is partnering with two Swedish retailers: Alpingaraget, a leading retailer of ski and sports equipment and the electronics store, Webhallen. The program will be available at both retailers' Stockholm locations.

The new app, called PayPal Instore, uses NFC stickers distributed through its retail partners and affixed to smartphones to enable purchases at NFC-ready point of sale terminals. Customers simply download the app (available on iPhone or Android smartphones), link it to a tag and swipe their phones over the terminal. The app then displays the purchase, as well as any discounts, so the customer can confirm the purchase.

The company will have personnel in both stores to demonstrate how the program works and to encourage customers to open PayPal accounts, Catrine Rhenberg, PayPal's Head of Consumer Engagement Marketing in Northern, Central and Eastern Europe, said In a call with Mobile Payments Today, Customers will also learn how to affix the sticker to their phones, access discounts and pay for purchases.

While an NFC-pilot program may sound surprising given PayPal's apparent ambivalence toward the technology, Rhenberg said the In-store effort is a part of PayPal's overall strategy.

"Considering all new technology being used today and the changing consumer behavior, there is no doubt that retailers need to have a true multichannel strategy," Rhenberg said in an announcement about the program. She added that PayPal is dedicated to supporting merchants making the most of the effort.

In her call with Mobile Payments today, Rhenberg said the goal is to extend the program next year, emphasizing that the holiday program was just a test. She said the purpose at this point was to simply gather feedback from merchants and customers. 

Along with the two retailers, Rhenberg said PayPal worked on the pilot with Accumulate, a Swedish company that specializes in mobile banking and payments. Rhenberg also said point-of-sale terminals at the retail locations were provided by Point AB, a Swedish payment gateway and point-of-sale provider. U.S. point-of-sale giant VeriFone recently acquired Point. 

For more stories like this, please visit the Contactless/NFC research center.

Topics: Contactless / NFC , Mobile Apps , POS

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