PayPal rolling out POS at Home Depot checkouts
January 10, 2012
While for many months PayPal has been using its blog to spread predictions about the end of the physical wallet, it's finally putting those words into action. The payment processing company recently announced that it would be piloting a POS terminal at five of The Home Depot's locations, allowing a group of employees to pay with a PayPal-issued credit card or by entering their mobile phone number.
Bloomberg reports that the move could signal some new competition for the likes of Visa and MasterCard, and notes that the partnership is the first for the company as it transitions from ecommerce interactions to the physical world.
In addition to testing out the point-of-sale-based transactions, PayPal is also working to develop its own mobile wallet offering, similar to the smarphone-enabled transactions that Google and Isis are developing.
"Home Depot has a significant reach," said Brian Blair, an analyst at Wedge Partners Corporation, in an interview with the news outlet. "PayPal has been historically in online payments. Now it becomes real-world currency."
However, other analysts predict that because customers already have the option to pay with cash or credit cards at Home Depot, PayPal will be hard-pressed to convince them that its solution is better.
Yet PayPal has been moving aggressively into the physical domain. In April, the company announced in a blog post that it had bought a mobile payment startup based in Boston called Fig Card.
Instead of the near field communication technology that many say will be the driving force behind mobile payment adoption, Fig Card's solution involves a USB device that connects to the POS terminal or cash register. In order to use the payment method, customers have to download an application to their smartphones.
Peter Chu, PayPal Mobile's senior director, wrote in the blog that "in the future, transactions can be as smart as a computer and not as dumb as paper. We won't need our physical wallets. We'll be able to pay any way we want, from any device, anywhere in the world with both flexibility and privacy."
In an interview with The Wall Street Journal, Gil Luria of Wedbush Securities said that the Home Depot partnership will only pay off for both companies if PayPal actually develops a system for retailers to target shoppers through their smartphones, sending them special offers or reminders based on what kind of products they are scanning. The newspaper also notes that Google has established its own wallet at several big-name retailers.
