PayPal wants to be your one true login. PayPal announced Monday it will be rolling out a service that will allow websites to use PayPal credentials to login and pay anywhere around the Web.
In addition, PayPal also announced that it is creating an embeddable payment terminal within websites that will allow online merchants to keep users on their site when making an transaction as opposed to redirecting them to PayPal’s website, as is the current practice.
PayPal expects the new workflow to help onboard more merchants to its platform and help consumers and retailers make quicker and easier payments. The new flow will apply to websites visited on smartphones, tablets or PCs to take advantage of the new login and embeddable payments features.
“I am sure you are all familiar with, as we all are that spend a lot of time on the Web, you go to a number of websites and you want to create an account and move on you have to do that with Facebook or Twitter,” said Carey Kolaja, VP global product solutions at PayPal. “What we have found is that not everybody is comfortable with that for a whole host of reasons and it maybe generation-specific such as with me. But you look at our what people are comfortable sharing, it is there financial details with PayPal.”
PayPal also announced that it is making progress with both its Payment Code and PayPal Beacon products that will enable retailers to make payments from their smartphones at physical retailers around the country. Payment Code (which allows for merchants to scan a bar code or a four-digit pin from their point-of-sale terminals at checkout) is partnering with POS terminal maker Micros and the Discover Merchant platform, which will increase the footprint of PayPal’s physical retail presence from 18,000 sites to nearly 1.9 million locations across the U.S.
PayPal’s Arrogance: Still Astonishing, Still Highly Effective
Nearly two years ago I wrote an article about PayPal’s new payment dongle called PayPal Here. PayPal was nowhere close to being the first to adopt a payment dongle and its entrance was very much an also-ran in the market behind the likes of Square. But PayPal didn’t treat the announcement like that. The company announced the dongle like it was the very first time a credit card swiping device was released that you could plug into your phone. It was hard not to laugh at PayPal for so thoroughly ignoring the fact that any of its competitors ever existed.
This is an approach that PayPal has long taken. Monday's announcements, ahead of the National Retail Federation conference inNew York City this week, also have a degree of PayPal’s own self-entitlement and bravado.
A PayPal login? Yes, really. PayPal thinks it can knock off the likes of Google, Twitter, Facebook and LinkedIn as your login to any sites of record.
“That becomes a really critical part in creating the triangular relationship between the three of us,” Kolaja said. “Consumers are dying right now to have one password, one ID to log on to multiple sites because it is becoming unmanageable when you think about it.”
There is very little evidence that people actually want PayPal to be their one true login the way they do with Facebook, Twitter or Google—logging in with those sites is usually as simple as clicking a button on a website. But it makes a lot of sense for PayPal to enter the discussion.
PayPal recognizes that the likes of Google and Facebook either have (or desperately want) users to tie their online financial identity to their social profiles. That way, Google and/or Facebook can become the de facto payment processor for the Web. This does not sit well with PayPal, which has the stated goal of becoming the payments operating systems for all things digital and connected. Facebook and Google are threats, even if PayPal won’t explicitly say that.
The new workflow for merchants and users has less to do with PayPal’s arrogance and horizontal march through the payments industry as it does with serving merchants and consumers. Taking the redirect-layer out of the transaction makes it far more likely for people to continue to use PayPal on websites while also allowing merchants to create consumer profiles of the people that are buying stuff on their sites. The relationship becomes a neat little triangle where the consumer gets ease of use, the merchant gets client information, and PayPal gets to take a little slice of both pies.
See also: PayPal's Astonishing Arrogance
“We will be very obvious in telling the consumer what of that information we will be sharing with the merchant,” Kolaja said. “With the users consent we will pass along some very basic credentials that will allow the merchant on the back end to create their own customer account, therefore allowing them to connect with that consumer as well. That way they can have a direct relationship with that consumer as opposed to it being through PayPal.”
The March Through Mobile
In 2011, participants lined up for what many people expected was going to become the next generation of the Payment Wars. The world was going mobile and payments were going there as well. Terms like “mobile wallets” and “Near Field Communication” were buzzwords that carried great weight and meaning to those who believed smartphones were going to fundamentally change the basic way we pay for things.
Google and the cellular carriers like AT&T and Verizon sprang forth with new ways consumers were going to pay. Instead of a debit card or cash, they would tap a register with their phone and—voila!—the payment would be made.
But a funny thing happened on the way to the market. The mega-tech giants, the cellular infrastructure operators and the financial processors like MasterCard and Visa all failed to create consumer traction with their whiz-bang ideas on the future of currency. They made a stab with technology, with apps, with partnerships and marketing and made nary a blip on the mass market. Buying physical goods through a virtual medium with real currency is just not something that consumers want or are ready for.
Some startups have gained a semblance of traction in the payments space. Square, the poster child for the democratizing and digitizing of payments, has spread so far and wide that it is now part of the cultural nomenclature, almost as much as Visa or American Express. Smaller companies like LevelUp and Dwolla have made local progress with mobile payments, but not at the scale that affects meaningful change across the country or the world. As we’ve heard before, there is just too much complexity and competing interests for all but the largest and most astute to really gain ground.
That is precisely why PayPal persists: PayPal is a company that calmly and pragmatically works its way through the horizontal landscape of the payments world with a self-assured arrogance that it will be the de facto way that people for things now and in the future. Love or hate PayPal, the way in which it has methodically plowed through the ever-changing world of transactions has been impressive.
PayPal didn’t jump on the NFC bandwagon when it became a hip thing to do, nor has it fully embraced the client-to-cloud model where a POS system connects to the Internet to help make a transaction (like the Square Register does). PayPal is still using PINs and QR codes, which many people find to be archaic and temporary stopgaps. PayPal doesn’t really make exclusive partnerships like Google did when it first announced Google Wallet or the carriers have had to do with their Isis payment apps. PayPal—like Apple in the smartphone market—is often not the first mover. But when it does make its move, it works with the knowledge that it will have a lasting impact on the market it just entered.
At the same time, PayPal’s overarching goal is to be everywhere. It craves ubiquity. But it's so hard to achieve because there are so many different ways to pay and so many backend systems to integrate with and so many merchants to get on the platform. Payments are hard because the dynamic is so very, very complex. Yet, PayPal insists it wants to be the payments operating system of the world. Hence, that often means that it will often be slowed by the necessary complexity of the ecosystem as features and functions—like the ones announced today at NRF—take time to build and integrate.
Eventually, the need to deal with that complexity may choke PayPal. One of the reasons PayPal bought Braintree for $800 million was to help deal with this complexity. That's a large pill to swallow. As we have seen with Square and how merchants continue to integrate iPads POS systems into their physical locations, PayPal is vulnerable to fast movers with simple solutions. But PayPal has size and industry trust on its side, which has proved to be quite useful in its own right.
On January 21, ReadWrite editor-in-chief Owen Thomas will sit down with PayPal president David Marcus to discuss the future of mobile payments in the context of the Bitcoin era. The event, which runs from 6 to 8 p.m. at Say Space in San Francisco, will be free—but you must reserve a seat, as space is limited.