Magazine article American Banker

PayPal Pushes the Cloud, but Declines to Rule out NFC Chips

Magazine article American Banker

PayPal Pushes the Cloud, but Declines to Rule out NFC Chips

Article excerpt

Byline: David Heun

Industry analysts have called 2012 a possible "breakthrough year" in the payments industry for near-field communication technology.

Such a view of the contactless-chip technology is understandable, considering speculation persists that new initiatives this year from payment networks, especially in the United Kingdom, will feature NFC.

In addition, Google Inc. included NFC technology in the Google Nexus S mobile phone, and rumors carry over year to year about what Apple Inc. intends to do with NFC, possibly earmarking it for the iPhone 5.

And then there is PayPal Inc., the most prominent player in the online-payments world and a company industry analysts consistently view as leaving NFC behind in its pursuit to secure a place in cloud-based mobile payments.

PayPal, a unit of San Jose, Calif.-based eBay Inc., recently extended its reach into plastic prepaid cards. And Home Depot and Office Depot locations are testing PayPal acceptance at the point of sale.

Yet most industry interest in PayPal's plans center on whether NFC is to be part of its future. PayPal conducted what it termed a "small NFC test" in Sweden late last year. It also has included NFC in its latest version of the PayPal mobile application for Google Android devices.

And yet confusion about where PayPal stands on NFC development continues because of industry interpretations of comments a PayPal executive recently made, says PayPal spokesperson Anuj Nayar.

When David Marcus, PayPal vice president of mobile, said during an interview with a technology website reporter that NFC could take too long to develop in a world likely moving away from traditional point of sale terminal use, some interpreted it to mean PayPal has no interest in NFC, Nayar says.

"To be clear on this, we have never said we are against NFC," Nayar says. "We view it as a technology, not necessarily a strategy."

That stance puts PayPal in a position to incorporate whichever technology in its payments system it deems favorable in the eyes of consumers, Nayar says.

"We find NFC very interesting as a communications protocol, but when you look at the key companies looking to adopt it, that adoption has not been as swift as any of us thought," he adds.

Meantime, PayPal continues to stir retailer interest in its in-store mobile-payment setup. …

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