PayPal Eliminates Need for Phone or Card in Retail Purchases

PayPal Eliminates Need for Phone or Card in Retail Purchases

EBay Inc. (EBAY)’s PayPal unit has a message for its 132 million users: put away your phones. The digital payments provider introduced technology today that lets consumers enter a store and pay without touching a credit card or smartphone. Retailers can plug a new device, called Beacon, into a power outlet and detect phones that have the PayPal application, sending a notification to the cashier.PayPal and challengers Square Inc., Visa Inc. (V) and Intuit Inc. (INTU) are rushing to help merchants install swipe-free payment options to cut down on transaction time while also allowing retailers to collect data on their customers. At stake is a mobile-payments market that’s estimated to surge to $90 billion in 2017 from $12.8 billion last year, according to Forrester Research Inc. (FORR)

“Our goal is not to make money on the hardware — it’s to cast a really wide net,” PayPal President David Marcus said in an interview. “We’ve partnered with almost every point-of-sale manufacturer. We have really wide coverage now.”

Marcus, who took the helm at PayPal last year, said he intends to sell Beacon devices for less than $100. He introduced the product today at the TechCrunch Disrupt conference in San Francisco.

Beacon emits a low-energy Bluetooth signal, which recognizes a customer’s PayPal app even if the phone has no cellular or WiFi signal, a typical problem in department stores with thick brick walls. When a customer is making a purchase, the cashier already knows who the person is and automatically charges the PayPal account even if the PayPal app isn’t running.

Beacon is compatible with payment terminals from companies including NCR Corp. (NCR), Micros Systems Inc. and Inc., PayPal said.

NFC Problems

Google Inc. and mobile carriers such as AT&T Inc. (T) and Verizon Wireless have tested near-field communication technology, which lets users pay by touching a smartphone to a credit-card terminal. That method has been criticized for being just as inconvenient as a credit-card swipe.

Marcus is seeking to improve upon technology PayPal already has, which requires pulling out a mobile phone at some point during the payment process or typing account information into a terminal.

The San Jose, California-based company began installing software on credit-card terminals at retailers like Home Depot Inc. (HD) last year, offering the option to pay with a name and PIN number instead of swiping a card. PayPal’s mobile app currently lets users pay by name after pulling out a phone, opening the app and checking into the store.

New App

PayPal updated its app last week to let users pay a bill at a restaurant without flagging down a server. It also teamed up with LLC, adding the ability to order ahead at nearby restaurants.

Beacon is coming to market as retailers and payment companies aim to detect when customers are nearby so they can push out relevant offers.

“It’s our most significant contribution to date to the changing behavior of point of sale,” Marcus said.

Beacon is PayPal’s second piece of hardware rolled out under Marcus. Shortly after he took over, the company introduced PayPal Here, a card swiper that plugs into a mobile phone and charges merchants a flat rate of 2.7 percent. The device competes with similar products from Intuit and Square, though PayPal hasn’t said how much it’s adding to its $20 billion in projected mobile payment volume this year.

Payments accounted for about 38 percent of EBay’s $3.88 billion in second-quarter revenue.

To contact the reporter on this story: Danielle Kucera in San Francisco at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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