PayPal has told Mobile it will expand its partnerships with mobile networks in a bid to associate itself with brands that consumers trust.
Anuj Nayar, senior director of global initiatives, believes PayPal can use the close relationship that mobile networks have with customers. The payments platform recently extended its relationship with Vodafone’s mobile Wallet service to enable users on the network to pay contactless using PayPal.
‘We’re working with strategic partners so we can build long-lasting, deep relationships with the consumer, and working with trusted brands in these markets – especially mobile – is critical. If consumers are choosing to stick with their carrier we need to be able to provide those same payment services.
‘We can bring our payments platform to many people who already have a relationship with the customer. One of the ways we can do this is through our Vodafone Wallet – we are offering a way for Vodafone customers to add payments. From our point of view it is about helping Vodafone use its data to offer better services to its customers. We’ll be doing the same thing in Latin America.’
Winning the payments war
According to Nayar, the mobile payments space has become one where brands compete to become the first to crack the market. He explained that the payments space is more complicated than just who will be the next to offer the service, claiming it is more about the transformation of technology.
‘Everybody asks “who will win the mobile wallet war?”,’ he said. ‘For us that’s asking the wrong question. It should be about what consumers want to do and what will be the most effective way to make that happen. All you have to do is make it easy – we’re now in an area of transformation where mobile is making that happen in a way that we have never seen before.
‘People don’t realise that when you open an app and see Apple Pay, that’s powered by PayPal. Payments is a lot more complicated than what companies do it, it’s a vast ecosystem and there’s a lot of touch points – we all may be competitors on one side but we also co-operate on the other side.’
Bridging the gap
The growth of payments using a mobile device is changing the way that consumers view money, and this is shifting traditional business models. Nayar explained that companies such as Uber are now becoming a payments platform as consumers get used to paying for a service using a smartphone.
‘Payments is far broader than how you pay in store. It’s changed what used to be a very traditional model and there is a shift from businesses such as Uber and AirBnB, moving towards becoming a payments platform. This uses PayPal's Braintree platform, which enables retailers to accept payments online. This is bridging technology between online and physical worlds and changing the way people view money, which is in turn being adopted by key mobile disruptors.
‘There’s a lot of fragmentation in the market. New players are coming in and a lot of them are interested in this, but it’s not about changing a form factor and instead of paying with a card paying with an image of a card. It’s about changing the way people look at money and making their lives easier. The tech is only now getting into the hands of people to drive mass adoption.’
Nayar claims that customer acceptance will play a key factor in the mass adoption of payments over
a mobile device. He believes that rapid uptake of smartphone technology is a good sign of how quickly this acceptance can cross over into payments, but added that a number of regulatory decisions have to be made before this can happen.
‘The mass adoption of smartphone tech hasn’t reached ubiquity yet. PayPal spends a long time ensuring the regulatory framework exists to make this happen, and working with regulators. When you’re working with someone’s money you need safeguards, and you also need consumer latency to move to something new.
‘But you just need to think about how quickly mobile technology has been adopted,’ he concluded. ‘The smartphone has only been around for eight years and already businesses are 100% dedicated to it.
'Mobile payments has an incredibly fast adoption rate but there’s still huge opportunity. For PayPal it’s gone from zero to $66bn in mobile payment revenue last year. A quarter of our business is all mobile, and this is just the beginning.’