Last week PayPal announced that its NFC payment platform is officially live in Spain and will continue to be rolled out around the rest of Europe for the remainder of 2016. This announcement brings yet another major player into the contactless payments space. But what exactly does it mean for the contactless payments industry?
PayPal’s strategy
Before looking at what this means for the contactless payments industry, let’s take a look at how PayPal plans to separate themselves from the pack. PayPal not only wants to have their own app be able to process contactless payments, but they want other businesses to use their operating system for their own contactless payment system. The quote below summarizes PayPal’s vision.
“It’s all moving towards mobile and we basically want to be able to utilize for merchants this underlying platform so that we can be their OS, do 100% share of checkout, enable merchants to create their own application, tie their rewards into our platform, do things like split tender at checkout and create a real value proposition change for consumers so that merchants can use mobile to get closer to their customers.”
PayPal envisions a future where their system is incorporated within other businesses apps where 100% of the checkout takes place. This way merchants could process payments, loyalty, and consumer data all through their app. PayPal wants a much more integrated solution than Apple Pay or Samsung can provide.
What will this mean for the contactless payment industry?
As of now, since PayPal is only rolling out in Europe in 2016, this won’t have much effect. But when it does finally hit the states, it will simply add one more competitor into the wild war of mobile payments. Currently, consumers are so overwhelmed with different ways to pay with their phone that they tend to choose the classic credit card. Eventually one winner will need to emerge if contactless payments want to see success.
PayPal’s strategy is one for the long term. The future of contactless payments lies within full integration with the checkout experience. The battle will rise between the merchants apps vs the native mobile wallets. Both PayPal’s plan for contactless payments and Apple’s plan are the same. They both foresee a future where a simple tap of the phone will take care of the payment, coupons, and loyalty. Apple sees a future where all of this takes place within a native mobile wallet app like Apple Wallet. And PayPal sees a future where this takes place in each merchant’s own app. Ultimately, this battle will be decided by consumers.
One thing is guaranteed
One thing you can definitely count on is for NFC to remain the major player in mobile payments and for QR codes to hit the wayside. Apps like CurrentC and Wal-Mart Pay are trying to shed light on mobile payments using a QR code. Too many major players in the mobile payment space are pushing for NFC and NFC will ultimately win this war. It is only a matter of time.
Stay tuned
This is definitely something both merchants and marketers are going to want to stay up to date on. The war between apps and mobile wallets is just getting started and could have a major effect on loyalty programs and marketing costs for businesses. If consumers start to go the app route, merchants will have high developmental costs because they will all be expected to produce their own app. If consumers go the mobile wallet route merchants will be expected to produce mobile wallet content that is valuable for their customers. While it is too early to tell who will come out on top, there will definitely be a winner.
