PayPal's new check-in payment service running in Kounta software. Credit: PayPal
Retail customers can pay without cash or a credit card under a new in-store payment API announced today by PayPal for Australia.
PayPal’s latest move comes as payment companies, banks, telcos and technology companies fight to be consumers’ default mobile digital wallet.
With the new PayPal Here API, customers open the PayPal mobile app and check into the store they are visiting. The store can then see their customers PayPal profiles on their point-of-sale (POS) terminals and charge the customer’s PayPal account by tapping his or her picture.
PayPal said it’s already has signed up several Australian retailers for the service. Sonoma Bakery, Guzman Y Gomez, Glue Store and Crayons will also introduce the in-store payment system, it said.
PayPal charges a merchant service fee for check-in payments similar to credit card fees, a PayPal spokeswoman told Computerworld Australia.
“PayPal’s fees range from a standard rate of 2.4 per cent plus $0.30 per transaction to a minimum of 1.1 per cent plus $0.30 per transaction, which is on par or a slight premium to credit card prices,” she said.
“Once a POS vendor has upgraded their software to accept PayPal check-in, there should be no hardware upgrade costs to retailers who wish to accept PayPal payments, because it runs on their existing platform and there are no monthly rental costs like with EFTPOS. This will be the case for both retailers using traditional POS systems and those using new cloud-based/tablet POS systems.”
PayPal said it’s working with terminal providers MICROS, Island Pacific, Kounta and Vend to integrate the service.
“Whilst the cloud POS vendors have been fast to pick-up on PayPal’s new payment service, the technology is equally applicable in the traditional PC register environment,” the PayPal spokeswoman said.
“PayPal is actively engaged with a number of cloud and legacy POS vendors, and feedback so far from both categories has been that integration is relatively straightforward.”
PayPal does not expect all retailers to adopt the technology right away, PayPal managing director for Australia, Jeff Clementz, said at the service’s launch event in Sydney. The company views 2012 and 2013 as a chance to put out the technology, observe consumer behaviour and get feedback from partners, he said.
“We’re also realistic,” he said. “We’re not naïve [enough] to say people are going to instantly throw out all their coins and credit cards.”
Besides speeding transactions with customers, the PayPal service provides retailers with the name and photo of users. PayPal said that lets store engage with the customer in a more personal way, and also to verify their identity for security purposes. Retailers can also view other customer information like recent and favourite transactions, it said.
PayPal rolled out check-in payments in the US earlier this year. PayPal chose Australia because it "is one of the most advanced markets in the world in terms of mobile penetration and usage," the PayPal spokeswoman said.
PayPal has 5 million active customers in Australia, Clementz said. The Australian division processed $1 billion in mobile payments this year compared to $35 million two years ago, he said.
PayPal does not believe traditional retail is going away despite rising e-commerce, Clementz said. E-commerce “is not going to overtake traditional retail,” but it does change consumer behaviour, he said. Internet research influences 50 per cent of traditional retail purchases, he said.
Retailers should take an omni-channel approach integrating in-store, online and mobile purchases, said Sean Sands, research director at the Australian Centre for Retail Studies. Consumers see the brand, not the channel, and expect a “seamless experience” across all channels, he said.
However, online clothing business the Iconic believes selling purely online is the future because it’s more convenient for consumers, the store’s managing director, Finn Hänsel, said at the PayPal event. “I believe in offline marketing but I don’t believe in offline retail.”
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