PayPal taps Bluetooth for contactless payments

PayPal Beacon lets customers pay merchants without touching their wallet or smartphone.
The PayPal Beacon is a USB dongle (seen here plugged into a power adaptor). Credit: PayPal

The PayPal Beacon is a USB dongle (seen here plugged into a power adaptor). Credit: PayPal

PayPal has embraced Bluetooth Low Energy (BLE) technology for payments after writing off Near Field Communications (NFC).

PayPal today announced Beacon, a payments service that employs the BLE wireless communications technology so that customers in a store can pay without reaching for their smartphone.

For the technology to work, retailers must plug in a USB dongle into a compatible point-of-sales system. When customers walk into the store with a smartphone and the PayPal app, they will be prompted to check in for hands-free payments. The PayPal app does not need to be open and users don’t need to have a phone signal or GPS turned on.

Customers can elect inside the app to have their device always check into their favourite stores so they don’t have to think about payment the next time they arrive. No information is exchanged between the user and the store if a customer ignores the prompt and does not check in.

The Beacon service speeds up PayPal’s existing in-store payments system under which the customer must open the PayPal app and check into a retailer each time they enter the store, and without any prompt from the store.

While NFC is frequently mentioned in the same breath as mobile payments, PayPal has publicly condemned that wireless technology.

In a blog post last year, PayPal president David Marcus predicted that NFC would “fail to gain mass adoption” and the debate over its suitability for payments “will slowly die in 2013.”

“Is tapping a phone on a terminal any easier than swiping a credit card?” Marcus asked. “I don’t think so—it’s not solving a real consumer problem and its [sic] not providing additional value to encourage me (or anyone else for that matter) to change my behavior.”

Today, Marcus pitched the Beacon service as PayPal’s answer to the problem.

“We challenged ourselves to find a better experience than swiping a credit card,” he said in a statement. “We figured the only better way to pay would be to do nothing. Just walk in a store, and, like magic, when you’re ready to pay, money is transferred securely. No wallet. No card. Nothing to do. Not even touching your phone.”

The Beacon dongle will be available early next year. PayPal hasn’t revealed official pricing, but a company spokesperson said it would cost less than $100. Transaction fees are the same as PayPal’s existing in-store payments system, which has been said to be higher than EFTPOS and more in line with American Express.

The Beacon dongle is compatible with all POS systems compatible with PayPal, including Vend, NCR and more, PayPal said. The company plans later this year to open its mobile in-store API for 100 select developers who pitch ideas to PayPal.

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More about: American Express, NCR, NFC, PayPal
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Tags: mobile payments, Near Field Communications (NFC), paypal, Bluetooth Low Energy, mobile commerce
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