PayPal Acquisition Hints at Company's Approach to the Mobile Wallet
EBay-owned PayPal said in February it will conduct several pilot programs over the next year to enable consumers to use their PayPal accounts-at the register. — But it didn't say how it would overcome technology barriers …
Context & Ripple Effects
PayPal set out its stall in February 2011 with a confirmed plan to run pilot programs over the following year letting consumers pay with their PayPal accounts at the retail register — but, as the company itself acknowledged, without explaining how it would clear the underlying technology barriers at the point of sale.
This week it answered partly by acquisition rather than invention: eBay's PayPal unit bought Boston-based mobile payments startup Fig Card, its second purchase in two weeks according to TechCrunch's pickup of the news, with terms undisclosed. The buy suggests the pilots will lean on bought-in mobile payments plumbing rather than something built internally.
First-order effects
- Fig Card's team and technology fold into PayPal's register-pilot program, giving eBay-owned PayPal a faster path past the point-of-sale integration problem it had left unanswered in February.
Second-order effects
- Other early-stage mobile payments startups face a sharpened choice between selling to incumbent wallets like PayPal and trying to survive against them, while retailers joining the year of pilots gain a more concrete vendor behind the experiment.
Third-order effects
- If the pilots hold, the pattern points toward online-payment incumbents absorbing point-of-sale startups wholesale to move offline — making the phone, not the card, the instrument merchants must accommodate at the register.
The trend: Online payments giants are buying their way into physical retail checkout, turning the mobile wallet into an acquisition race for point-of-sale technology.