Ciao!
Greetings from Rome where I am, ahem, doing a little field work on the adoption of mobile payments outside of the US. Ok, well maybe just a little in between some great fieldwork checking out the coolest shops, restaurants, and museums in this most fabulous city.
On the former, I have to say that while I have seen a zillion mobile phones I’d be hard pressed to find a single soul using one to pay for anything at a store or a café or even trying to.
On the latter, let’s just say that I’ve encountered nary a problem using my good old-fashioned mag stripe cards in any number of shops and restaurants.
You will also be happy to know that good old cash is alive and well here too – in spite of any number of articles published in the newspapers here since my arrival on the irritation that the European Union has with the cash economy in Italy since it would very much prefer this underground economy to surface so that it can be taxed. But for now, at least, you can’t ride in a taxi; you can’t buy at some of the shops off the beaten tourist path; and if we are to believe any of the allegations coming out of the recent “Vatileaks” scandal, you can’t open an account at the Vatican Bank, or do any number of things associated with, shall we say, some of what would be considered more Sicilian pursuits, without cash.
I haven’t been too busy, however, to keep up with what is going on back home in the payments field. PayPal kicked off the summer season last Thursday with a slew of announcements about its POS payments pursuits. No doubt by now, everyone is entirely up to speed on the partnerships (e.g. VeriFone and Equinox), and retailer lineup (e.g. Barnes & Noble, Aeropostale and Office Depot) that further cements its physical retail ambitions. It’s pretty clear that PayPal is putting some serious puzzle pieces in place to reinvent the experience at the physical point of sale – using the combination of mobile and its PayPal installed base to entice merchants to play along.
What didn’t get a lot of ink was what it is doing with the smaller, local merchants. Its Thursday announcement also included a partnership with a company called ShopKeep, which is based in NY and has developed a Pay by Square-like solution in use at roughly 2000 local merchants (small guys, like cafes, ice cream shops, etc.). It is iPad-based and has a lot of the same features as Pay with Square: the consumer has to have the PayPal app downloaded on her phone; she checks into the merchant and then pays at the point of sale without having to produce the phone; the cashier authenticates the transaction by associating the person’s face with what they see on their terminal. The demo here shows you how it works.
This is clearly PayPal’s shot across the bow at Pay by Square. PayPal is now experimenting with a small merchant solution that leverages the mobile phone and a new IP-enabled POS device to authenticate a transaction at the register using facial recognition after the consumer checks in using their mobile phone. I haven’t seen this process live, but after looking at the demo, it seems quite clear that this is all about test and learn. The process seems a little clunky from the consumers’ perspective – it takes like 3 or 4 screens to get the app ready to engage and then it takes as many for the cashier to check out. At least as the solution exists right now, I wouldn’t want to be in line behind someone using it – it seems like it would take a lot longer than the traditional card swipe – and seems like it comes with a lot more rigmarole than what, say, LevelUp now offers. But, unlike Pay by Square, which has to build both a consumer and merchant network, PayPal can leverage its existing customer network to further extend its local merchant network offline.
But I sort of don’t think that’s the real point of this announcement. I think that this ShopKeep experiment gives PayPal 2000 local merchants to play around with, and potentially tens of thousands of consumers in those geographies to also incent to use the app to build its local physical small merchant and consumer network. I wouldn’t be surprised if the next thing you see being glommed onto this app is a series of merchant offers served up by PayPal Media Network (formerly WHERE Ads), which create demand gen for merchants accepting the app, which could stimulate more merchant interest, which could create more consumer interest.
So, the big story is probably not as much to do with how elegant the app is now or even whether the merchants are teensy weensy merchants in a few cities here and there. The big story here is that whatever we see PayPal testing in the local ice cream shop will probably find its way into the big retailers once they work thru the user experience on both the merchant and consumer side. Sure beats focus group testing, doesn’t it?
Anyway, that’s the view from my perch in the Eternal City. What’s yours?