Las Vegas is a good place to part with your hard-earned dollars. So perhaps it's fitting that PayPal, the money-moving arm of eBay, rolled out another way to pay at the Money2020 conference in that city this morning.
Called Payment Code, it's a new feature of PayPal's recently revamped mobile app. It works in a way that's becoming increasingly familiar to consumers who buy lattes and check into flights with their smartphones: Open the app, check in to a store that takes PayPal and then present a barcode to the merchant for scanning. The app then generates a one-time-use code that the customer enters into the same PIN pad used for debit-card transactions.
Some older barcode scanners have trouble reading smartphone screens because of reflections. For those locations, cashiers can punch in a numerical code.
PayPal isn't even insisting on using its own app: It says developers can integrate Payment Code into merchants' apps, with the barcode displaying as part of checkout.
An Overstuffed Virtual Wallet
So what's the hitch? Payment Code is joining a dizzying array of in-store payment options—and I'm just talking about the ones offered by PayPal. Consider PayPal's current in-store payment methods:
- Use the PayPal app and order pickup or delivery
- Use the PayPal app, check in, and pay by name
- Use a PayPal-issued plastic payment card
- Pay with a phone number and PIN linked to your PayPal account
- Pay with Payment Code
Confused yet? I am, and I've been covering PayPal for as long as it's existed as a company.
In an interview leading up to the launch of Payment Code, PayPal executive Don Kingsborough, who's in charge of its retail-payments business, defended the company's variety of payment methods, arguing that it had to offer options to account for different store environments.
And going forward, Kingsborough said, the emphasis was going to be on checking in with PayPal's smartphone apps: "We have two ways to pay if you check in: You pay with your name, or you pay with a code."
Since PayPal's older methods, like the option to pay by entering your phone number into a PIN pad, are already in use at some retail locations, it's unlikely the company will abandon them in the short term. But it's pretty clear that those older, clunkier methods weren't catching on: RBC Capital recently reported that PayPal's rollout in Home Depot stores had "limited traction."
What's In Store?
Ultimately people aren't going to use PayPal in stores because they're dying to stop using credit or debit cards and whip out their phones instead. PayPal's best hope to spur usage in stores is through marketing promotions—discounts offered in cooperation with retailers. While consumers are happy to pay with plastic, searching through wallets or purses for coupons is a genuine pain.
And ultimately, Starbucks may be PayPal's best ally, despite its partnership with PayPal archrival Square. The coffee chain has trained consumers to pay with a barcode on a smartphone—even Square had to fall back on the barcode-scanning method rather than its signature pay-with-name feature to adapt to Starbucks' point-of-sale systems.
If barcode scanning can work at coffee shops and airport gates, it seems like it could catch on more broadly. And if PayPal and its merchant partners can deliver discounts, not just the questionable convenience of paying with a smartphone, they may have a shot at replacing the old leather wallet. Or if not replacing it entirely, at least putting it in its place.