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I remember creating my PayPal account back in 2000 when an acquaintance of mine wanted to split the lunch tab with me and sent me $20 via email a couple of days later. I remember hurriedly opting to cash out via check, having little trust in a newfangled payment startup. That $20 actually languished in said PayPal account (despite issuing a check that ended up never being cashed) for another couple of years before I actually did something with that money and my PayPal account. What follows is the rest of that journey. 

As any other, eBay was the reason I was forced to use PayPal in the subsequent years. It became a necessary evil (fees), a flag to swear allegiance to, in order to do commerce online. Those days, I went online to read reviews on things I wanted to buy in-store. Epinions.com was a go-to resource to read other’s takes on things. I would end up buying from the cherished, well-trodden Fry’s stores in the Valley.

Funny, how things have changed. Somewhere along the way we reversed these roles — where once we used the web for active evaluation, the necessary research that one must do before parting with hard earned cash, and said parting was almost assuredly done in an in-store setting for the lack of trust present in online commerce.

To a large extent, Amazon and PayPal were responsible for reversing these roles: Amazon in how it introduced us to the long tail of commerce, where even the most obscure item can be found tucked away in one of its nooks and corners. And PayPal replaced uncertainty and fear of e-commerce with reputation  in how it abstracted the risk of the unknown by positioning itself in the middle of the buyer and seller. No longer did I have to worry about giving my credit card to a seemingly fly-by-night web merchant; PayPal took care of it for me.

Together, Amazon and PayPal is why e-commerce is where it is today. And how things have changed — we now prefer to touch and taste things offline, but hardly flinch before having them ,shipped directly to our doorstep for the sake of price and convenience.

As customer behaviors radically shift away from the corner/bigbox store, are mobile wallets siding with a losing faction? Should they really be focusing on optimizing our retail spend, or should they work on lowering the barriers for online commerce further? As Amazon and others continue to eliminate reasons for why I should drive out to the store, we continue shoving things into a phone to make it easier to spitball a credit card number back and forth between a customer and a merchant. But, I digress.

Anyway, back to my story. PayPal had its own share of naysayers then, as they do now. Even with PayPal, commerce on eBay for me was not without trepidation. I remember a particularly spurious seller, who looked legit, but fled with a tidy sum from a number of us who paid him or her (or it, because on the Internet, no one knows you are a dog) for event tickets. With PayPal then it was easy to fund your transactions by credit and I was careful to do so – for the non-trivial transactions. In this case, I opted to skip PayPal’s dispute process to go directly to Amex. I had my money back in a month. PayPal – 0. Amex – 1.

As time went on, I noticed that PayPal made it intentionally more difficult to choose costlier funding sources (credit) over more preferable funding sources (ACH). Initially, it was more of a nudge, a friendly suggestion, but later on it became more of a shove, and the option to change the funding source to a credit card disappeared from the flow altogether, requiring the customer to deviate from the transaction to change the funding source (something that is not obvious to most of us). And as I saw these changes, I limited my PayPal purchases to those where convenience mattered most and the transaction totals were small enough that I wouldn’t flinch funding them directly via my bank account. I relied less and less on PayPal as I started transacting more and more on Amazon, where the “One click buy” was an obvious improvement even over PayPal. I began starting and finishing my product searches on Amazon, bypassing even Google – a fact not lost on Google itself.

And so when Thanksgiving hit this year, I knew my purchases were going to be limited to Amazon and the sites that supported PayPal. Like millions of others, I chose my couch and cocoa over standing in line for something trivial as a blu-ray player. Though tucked away in the warmth of my home, on a day like Black Friday, it is important that the speed to complete a transaction is of the essence, when a thousand keyboards are unleashed in pursuit of a deal. One simply does not reach for plastic cards and shipping addresses, you do what you have to do and get the hell out.

Most of the time, what I wanted to buy was on Amazon, and as a hundred times before it, order completion was a couple of clicks – if at all. And for when I was not lucky enough to find what I needed on Amazon, I filtered out the sites that did support PayPal, and those I selected. I may have bought one item during the entire Thanksgiving season where I actually entered all 16 digits. If the site made me do more than what I felt was necessary, I was out of there. I simply did not need it enough.

Meanwhile, PayPal was hitting me with its in-store alerts, nudging me to set it up for in-store payments. I had held off long enough, but a couple of retail offers that popped up on my radar ($5 at Jamba Juice and $10 off of $50 at Toys R us) proved to be enough of an incentive. But if only setup were that easy. Multiple attempts to verify my mobile number to be used in store ended with an error, as it complained that it cannot confirm my phone number and asked me to re-enter. I finally figured out that my mobile number was in my PayPal profile as my home number. Once I switched that back, PayPal was able to successfully verify. Pity that PayPal couldn’t do more data integrity checks on whether the customer had a mobile number on file, instead of throwing a cryptic error. I was quite persistent when it didn’t work the first time – others would not be quite so.

I did not have a Jamba Juice nearby, so I ended up alerting a friend of mine to subscribe for the same offer and try it out in-store. He successfully completed the requisite steps for in-store checkout, subscribed to the offer, went to the store – only to find out that the Jamba Juice he went to did not have a PIN-pad, and he had not received the physical PayPal card. With less than a 1000 locations it would have been optimal if PayPal had bothered to alert customers near to a location that did not offer the hands-free checkout. Simple enough to say, I later comped my test subject his Peanut Butter Moo’d Smoothie.

I was more careful when it came to Toys R us. One simply does not attempt two trips to Mordor with a 4-year-old hobbit in tow. A new Toys R us store had popped up in my neighborhood, and a weekend scouting trip proved what I suspected: it had the PayPal icon as well as GoogleWallet. The next day I was back with my progeny. Picking up items worth $50 in total was surprisingly easy (and a lot less heavy than when I was a kid – Damn you, Ninjagos!! – Aren’t these made of plastic?) and paying by PayPal was a cinch. No wallet. No phone. Absolute nirvana. Except for the 4 year old who refuses to believe that I paid for his toys because his Dad never took out the wallet and swiped. And regret – at spending $50 for a bunch of plastic figurines.

So a customer journey that spanned over 12 years, with many fits and starts and a number of gripes, now stands at the mouth of a new adventure – one which ends with PayPal becoming as ubiquitous in retail as it once did in e-commerce. In the latter, it made commerce trusted and convenient. Question is – what role will it play in the former, where trust and convenience are hardly broken and the rest are not worth fixing yet.

Postscript:

I was recently enticed to signup by Dwolla’s Alexander Taub who tweeted me some cold hard cash. Signup was a cinch, and I admired how Dwolla drew me in deeper with each bit of information I divulged, like a seasoned investigator probing the suspect for more information, who in turn sang like a canary. Before I knew it, my life was an open book for Dwolla. Though signup was easy, I still have not been able to get at the $1 Mr. Taub promised me, as Dwolla errors out at any of my attempts to lay my grubby fingers at the crisp $1 Mr. Taub refuses to be parted with. I hope that was not coded in as a feature.

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The Future of Mobile Wallets

Latest posts by Cherian Abraham
Cherian Abraham
Cherian is a Mobile Payments Advisor with Experian Global Consulting. He is also an advisor to ModoPayments. As a mobile payments veteran and founder of Drop Labs, Cherian has worked with leading banks, retailers, mobile platform providers and startups in this space. Opinions expressed here are strictly his own, not that of Experian.
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