To many consumers and businesses PayPal is first and foremost a person-to-person (P2P) payment service which can also be used to enable payments on auction site Ebay, and third-party commerce sites. I would speculate that a significant share of the $27 B transacted via mobile devices (phones and tablets) on PayPal during 2013 was driven by Ebay and P2P transactions.

However, as profiled in our mobile wallet report, “Significant Challenges Ahead in the Mobile Wallet Battleground,” PayPal has also been positioning to enter the in-store payments space. In the US it is issuing payment cards and is accepted by a number of large retailers including American Eagle Outfitters, Home Depot, and Toys R Us among others.  It also introduced in-store mobile payments in the UK, albeit on a small scale, and is promoting PayPal Beacon to retailers. PayPal Beacon aims to change the way consumers pay with their mobile phone by allowing them to “check in” to stores and authenticate transactions at the till without taking a wallet or phone from their pockets. At this stage PayPal has yet to announce partners that will trial Beacon. PayPal is also enabling payment authentication via the fingerprint scanner on Samsung’s Galaxy S5. Furthermore, since the support of Host Card Emulation (HCE) within Android v4.4, PayPal is starting to get warm and fuzzy with NFC. HCE would enable PayPal to offer secure mobile payments without needing to work with mobile operators or OEMs. PayPal claim that over the course of 2014 it will launch solutions enabling PayPal users to pay for orders ahead for later collection (e.g. Wagamamas), or to pay for items in restaurants while at the table.

Mobile devices are becoming increasingly important tools for retailers; mainly in the form of advertising and marketing, but also potentially as a payment tool. For example, Starbucks, is achieving significant success with mobile payments in its coffee shops, with it claiming it was approaching 5 million weekly payments via mobile, accounting for 14% of total transactions.  PayPal, is aiming to replicate Starbuck with a payment platform that works across multiple retailers, and which can be embedded into retailers own application.    

Consumers are using their phones more than ever to buy things, but mainly remote purchases via tablet or mobile phone:

• 2013: Marks & Spencer noted a 200% rise in sales via mobile and tablet in 2013, with these mobile devices accounting for 18% of traffic to M&S.com.
• Nov 2013: Walmart indicated mobile traffic (phones and tablets) accounted for 53% of total traffic to Walmart’s website on Thanksgiving and that it witnessed a 3X rise in new customer purchases on mobile versus 2012.

Mobile is not the only area it sees growth. PayPal claims it will also take its payment platform across screens, from watches through to connected TVs. At MWC 2014 PayPal demonstrated a PayPal application specifically for Samsung Gear 2 devices. So, PayPal’s rebranding effort delivers a logo that works across all screen sizes, and can be integrated on retailer POS equipment if need too.

While PayPal can boast 143 m global accounts, and is clearly an established brand in digital payments, in-store payments will remain a tough nut to crack without support from merchants. While rebranding aims to put PayPal into new light and create some buzz and attention, convincing retailers to adopt its platform will prove a far sterner test. Beyond a few retailers looking at mobile to invigorate the physical retail experience is in-store mobile payment a solution to a problem that does not really exist?  What benefits can PayPal bring to retailers in the form of lower cost and improved margin? To what extent will PayPal allow retailers to control customer transaction data? With so many competing solutions ranging from mobile operators, retailers own solutions, mobile operators, Google Wallet, Square Wallet, and LevelUp, among others, the choice remains bewildering for retailers. So, while PayPal’s rebranding helps it to establish position in the competitive mobile payment landscape, there clearly a still long way to go before we are able to declare any winners in this space.