PayPal’s New App: A Small Glimpse into the Mobile Payment Future

BIA/Kelsey released a report yesterday on mobile shopping and payments (more on that in a separate post). It’s choc full of analysis and case studies of the emerging standards that are competing for user and merchant attention in these early days of mobile payments.

In addition to merchant-facing POS platforms like Square, Swipely, PayPal HERE, LevelUp, etc., we looked at the associated user-facing apps. Square’s app for example lets you see the closest merchants that accept Square and let you check-in, pay,etc.

This could grow into a competitive local search utility: local discovery, ordering in advance, loyalty deals. Payment processing is really the first step — the boring part — towards lots of interesting consumer utilities (the same way it is for merchants!).

From the report:

This has convenience benefits, a major success factor for mobile payment systems. But it also opens the door for other possibilities. Because consumers are opening the app to transact at nearby businesses, they could be receptive to promotions. It could therefore develop into a fertile environment for information, reviews and available coupons for nearby merchants. Rather than going to Google or Yelp, this could be a good one-stop-shop for consumers to find and transact with local businesses.

PayPal, incidentally on the same day of the report’s release, launched a major app update (iOS and Android). It brings lots of these features and a few more cool perks such as toggling between different stored accounts and “skip the line”.

Skip the line is something PayPal has been testing with McDonalds and Jamba Juice but is now rolling it out to 1000 restaurants and cafes with more to come. Just like it sounds, it lets users browse and buy items in advance and then roll right in to pick them up.

From our report:

Another developing feature from PayPal is skip the line. Because the transaction happens virtually, orders can be placed and paid for in advance. Someone in a hurry can place her coffee order a few blocks away from a cafe and then swiftly pick it up with no wait. Opportunities to save time always appeal to consumers. For merchants, skip the line meanwhile optimizes the flow of customers through their establishments. This will vary based on the type of product or service, but has great potential for many merchants.

Participating sit-down restaurants will also allow you to pay your check right at the table and then go on your way. This ties in with PayPal’s existing ePOS initiative where it’s baked in to leading POS hardware brands so the above is compatible off the bat.

That installed base will be one success factor in mobile payments. PayPal also has an edge with 200 million users already signed up from its legacy business (look out for Apple/iTunes here). Lastly, trust is a factor for something like payments, which PayPal has established.

This is all part of the offline commerce push that PayPal has been on for some time — one piece of eBay CEO John Donahoe’s master plan. We can expect a lot more, the least of which is PayPal joining the ranks of go-to SMB window decals like Yelp and Foursquare.

We’ll continue to cover this closely, including at our SMB Digital Marketing Conference next week in Austin. Meanwhile, you can see a walk through video of the app updates here.