As you may have read, Google officially launched its mobile payments platform Google Wallet recently, which allows you to pay for products in the real world by tapping your NFC-enabled Android phone against a compatible card reader. Shortly following the initial announcement of the technology in May, payments giant PayPal went on the offensive, filing a lawsuit against Google and two former PayPal executives who now are in charge of mobile payments at Google. Allegations of “misappropriation of trade secrets, and “breach of fiduciary duty” were thrown out against these individuals. Clearly, it’s messy. While the lawsuit itself spoke volumes about PayPal’s view on Google Wallet, the eBay-owned company has not really commented on Google Wallet over the past few months. Until now.
We sat down with PayPal’s director of communications, Anuj Nayar, who candidly gave me the company’s opinions on Google Wallet and NFC technologies. We know that eBay and PayPal have a somewhat interesting view on NFC technology. In a recent earnings call, eBay CEO John jokingly said merchants refer NFC “not for commerce.” But PayPal has dipped its toes in the NFC pool with support for Android, which Nayar explains as ‘keeping an eye’ on the technology.
Nayar says that one advantage he sees with PayPal’s payments platform vs. Google Wallet is that “we’re not asking anyone to do anything different.” He points to the fact that in order to use NFC right now, many consumers would have to change phones to the NFC-enabled Nexus S. “There simply aren’t that many NFC enabled phones out there and we don’t see NFC as something that will happen very quickly,” he explains.
Another challenge to the adoption Google Wallet’s platform and NFC, says Nayar, is trying to get merchants to change their behavior. As my colleague Greg Kumparak wrote in his review of Google Wallet, merchant adoption is still limited.
Nayar says that mass adoption of NFC is still at least three years away but even then, the technology will not replace mobile payments all together. Of course, he explains that PayPal is watching the NFC space closely (by launching their own integrations), but the sense is that the company isn’t heavily investing in the technology because of some of these barriers to adoption.
An area where PayPal is investing in is a comprehensive solution for in-store merchants to integrate PayPal into the checkout experience. Later this year, PayPal will be rolling out a one-stop shop for merchants, both online and local businesses, to manage payments from customers. Details are sparse but PayPal says that new features will include location-based offers, making payments accessible from any device and offering more payments flexibility to customers after they’ve checked out.
And soon, you’ll also be able to use PayPal in physical payments gateways at stores as well (where you would normally complete the credit card swiping process), and will have the ability to access realtime store inventory, receive in-store offers, and real-time location-based advertising from stores. The company is expected to announce a number of in-store partnerships with large retailers in the near future.
Nayar says that PayPal’s solution is more complete for merchants, and is capitalizing on a huge factor in the end-to-end shopping experience—data. He explains that relevant data and personalization will play a big role in the new payments experience, so that PayPal’s 100 million-plus users will be able to see more relevant offers and experiences and merchants will be able to target customers.
PayPal isn’t the first payments company to go on the offensive against NFC. Keith Rabois, COO of mobile payments company Square, said last week at GigaOm’s Mobilize conference that NFC “has no value proposition for consumers and merchants.”
Still it’s hard to ignore the fact that Google, as well as other mobile tech companies like HTC, LG, Motorola, RIM, Samsung and Sony Ericsson, are making major investments in NFC. Even credit card companies are making bets on NFC as well. And MasterCard, who is a partner in Google Wallet, has said that NFC is a “five-to-ten year effort.” As my colleague Sarah Perez points out, the merchant adoption hurdle to NFC is valid, but contactless infrastructure is already in more locations than consumers may realize, even if it’s somewhat underused.
While there’s no crystal ball to tell us whether NFC will be around in a few years or ten years, clearly PayPal isn’t making a huge bet on the technology and is investing in other in-store technologies. However, even if NFC is years away from mass adoption, Google is gambling that being early to the game will help the company dominate the mobile payments market in the future. It will be surely be interesting to see whose foresight pays off in five years.
And in case you were wondering, Nayar says there are no updates to the status of that PayPal v. Google lawsuit.