Technology isn’t what’s holding mobile payments back

My colleague Kevin Fitchard that PayPal believes it has “cracked the mobile payments enigma” with a new offering that combines QR codes and PIN numbers to conduct transactions at the point of sale. Shoppers check in using the PayPal app to find out whether the store they’re in supports Payment Code, as the system is called; a QR code is then presented on the phone’s screen that can be read under the scanner to finalize the transaction at participating stores. PayPal is partnering with the credit card company Discover, which has a presence in 7 million retail locations in the U.S. alone.

PayPal claims its new system addresses two main hurdles in mobile payments: Getting retailers to install point-of-sale equipment in their stores, and training salespeople to use that equipment. And PayPal points out that Starbucks has enjoyed tremendous success with a similar system.

But I think the biggest key to Starbucks’ success in mobile payments is in how well its system is integrated with its loyalty program. The app links automatically to the company’s Rewards program, making it easy to track their purchases and redeem freebies. PayPal may be on the right track in using QR codes, which are supported by most handsets and don’t require huge investments from retailers, but it must work with retailers to give customers reasons to use its system rather than credit cards or cash.

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Colin Gibbs

Colin Gibbs

Founder and Principal Peak Mobile Insights

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