PayPal adds QR and Bluetooth to their payment app

Thursday 10 October 2013 | 13:57 CET | Background

PayPal is working on several features to enable faster checkout in retail shops with the PayPal app. Payment Code allows the merchant to scan a QR code generated by the PayPal app, for a quick payment authorization. PayPal Beacon enables automatic customer check-in over Bluetooth, for 'hands free shopping'. The US company plans commercial launch early next year.

Payment Code will be rolled out as an update to the current (PayPal or third-party) apps. A customer checks in first, allowing the merchant to set up a transaction over the PayPal network. The app will then generate a one-time QR code or a numerical code. If the merchant has a barcode or QR code scanner, the merchant scans the code to complete the transaction. If the QR code is not used, a four digit code can be entered on the PIN pad at the cash register. No credit card details are shared. This sequence is an alternative to the process of entering a phone number and PIN on the pad, but still requires opening the app. PayPal is engaging app developers for a hands-free service, PayPal Beacon.

Beacon will be tested in the USA, UK, Australia, Canada, Hong Kong and Japan first and will be launched in 2014 if all goes as planned. It uses a Bluetooth Low Energy (BLE) interface to connect to the app when a PayPal user enters a store. PayPal has designed a small USB powered antenna that sniffs out Bluetooth signals.

The app on the phone will sound a beep or vibrate to make clear that a check-in is available, but users can also grant automatic check-in. Once the Beacon has set up a connection with the PayPal app, the merchant can initiate a payment transaction and the customer can authorize it, without the need to touch the phone. What it does do is promise completely hands free shopping. If you wish so, you can pay by just showing the bottle or bagel you’ve just picked up. PayPal sends your profile photo so the merchant can identify which PayPal account belongs to which customer.

PayPal has developed a number of API’s and is welcoming developers several months before roll-out is planned. PayPal Beacon will however only work with PayPal smartphone apps, not with third party apps. Initially, PayPal offers a single BLE device for small shops, but the radio protocol lends itself to indoor mapping. A large store can install Bluetooth equipment to track customers as they move along the aisles and send offers. The technology will go into a test phase with selected developers and merchants. The costs and rates will be announced at the time of the commercial launch. 

The mobile operator-led consortium ISIS and retail-led consortium MCX are developing – competing – NFC payment systems, but several factors are now working against NFC. Unlike NFC, both QR and Bluetooth will work with most smartphones, and require little extra investment from the merchant. Both also work on the iPhone, an important consideration as Apple leads the US market with around 40 percent of smartphone sales.

PayPal will also launch both services in the UK, but the company has a small presence in retail sales in Europe. NFC is in active service or nearing launch in a growing number of EU markets, but in most cases it’s developed by banks and card networks as an extension of debit card payment, not as a replacement.

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