PayPal is facing a slew of competitors in its bid to become the “operating system of mobile payments”: Apple, Amazon and Google chief among them. But which mobile payments company frustrates PayPal the most?
It’s Square, according to a February 12 Forbes profile of PayPal CEO David Marcus. According to Forbes, Square “had none of the inherent advantages of the tech giants and yet has built a platform, from scratch, that could become a mobile payment standard. ‘I was shocked that PayPal didn’t already have something like this,’ says Marcus, who took over as the division’s president two years ago.” One of Marcus’s first actions and, he says, PayPal’s first major product launch in years, was PayPal Here, a Square knockoff for small merchants.
Square and PayPal are increasingly at odds in the battle to sign merchants to their respective platforms. Square scored a win last week with Whole Foods, which will install payments kiosks similar to those at Starbucks. Square is also increasing its merchant sales team in order to woo more brands, the company announced last week.
PayPal is battling for the same real estate. The Forbes piece opens with an incident at a supposedly PayPal-friendly restaurant:
Eager to show off some of the magic, we’re racing to Birk’s, a bustling Silicon Valley chophouse that accepts PayPal from diners. Marcus fires up the PayPal iPhone app, which locates him in the restaurant and allows him to scan a bar code before the meal and watch the check update on his phone in real time. The idea is to bring the speed and simplicity of internet shopping into the physical store. “I like to think of it as ‘The Matrix,’” grins Marcus, a slight accent revealing his French and Swiss upbringing.
But there’s a glitch in this matrix. The restaurant is not running the latest program. There’s no bar code to scan before the meal and none on the check. Instead Marcus must type in a seven-digit code attached to the bottom of the check. When the check arrives the code is missing. “ The challenge,” Marcus says, trying hard to mask his frustration, “is not only scaling the technology, but having people understand it on the merchant side.” Ten minutes later the waiter returns, code in hand. Marcus enters a tip, pays the bill via iPhone and sighs: “When it actually works you don’t have to wait.”
Ah, yes, that merchant buy-in piece is a tough one. Cover, which is attempting to bring the Uber experience (Uber’s payments are powered by PayPal subsidiary Braintree) to fine dining, launched last fall and today counts just 43 of Manhattan’s approximately 3,500 restaurants as its customers. It’s difficult to envision either Square or PayPal having the scale to sign enough merchants to “win mobile payments,” and the so-called merchant-friendly mobile wallet, MCX, is a mess these days too, as documented by Cherian Abraham.
The future will likely reflect the most successful mobile payments venture in the U.S. today, Starbucks, whose mobile wallet is powered by both PayPal and Square.
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