One advantage for PayPal is that it already has 106 million active users globally and is a familiar brand. “It’s really extending an existing relationship versus creating a brand-new one, and I think that positions them extremely well,” says Forrester Research analyst Denee Carrington.
A big challenge, says Carrington, will be getting large merchants to accept PayPal. That’s why the Home Depot deal is significant. The system allows you to pay with PayPal by entering a cell-phone number and a PIN. On a recent trip to a store near San Francisco, I sidled up to the checkout counter with a bottle of carpet cleaner and entered my digits at the existing card-swiping terminal. It wasn’t faster than handing over cash or swiping a card, but avoiding those motions felt both illicit and cool. (I already had a PayPal account, but before my shopping trip I had to go online to set up a PIN and enable the new feature, which is called “store checkout.”)
Given the expected growth in mobile-phone payments, PayPal is also working on extensive changes to its smart-phone app—currently just a version of its website interface optimized for phones. For instance, starting in May, PayPal will begin letting you change the way you pay for a purchase after the fact. Maybe you used your credit card to purchase a $500 TV, and a day later decide it would be better to put $300 of that on your debit card. PayPal’s phone app will allow you to make the switch, as will its website. “What is really hard right now is to use our money in the ways that are most easily tailored to what it is we’re trying to do,” says Shrauger.
What’s next? PayPal’s ideas for how its technology could evolve were on display in the faux mall. I was given a tour by Josh Schoonmaker, an actor and expert in “experiential marketing” who used a variety of iPhones and wall-mounted screens to illustrate how PayPal thinks people will shop in the near future.