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In a move that could significantly boost mobile-payments activity, PayPal Inc. on Tuesday unveiled a single-click payment method for merchant apps.
Dubbed One Touch, the method allows mobile users to log in once with their user names and passwords, then simply touch or click on a “buy” button for all subsequent transactions with that merchant. One Touch is based on an open platform from Braintree Payments Solutions LLC, a Chicago-based processor PayPal acquired 11 months ago for $800 million.
Braintree’s Venmo unit, which offers mobile person-to-person payments, last year began offering a service called Venmo Touch, from which One Touch has been derived.
One Touch supports both the iOS and Android operating systems as well as major card brands in addition to PayPal balances.
PayPal is touting the streamlined payment method as “the fastest mobile checkout” and claims it will drive up conversion rates for merchants. The San Jose, Calf.-based processor says its transactions already enjoy a conversion rate that is 70% higher than that for non-PayPal transactions.
If it succeeds in solving cart abandonment, One Touch could light a fire under mobile payments. A major impediment for mobile transactions is the awkwardness of entering user credentials—and sometimes card numbers, shipping addresses, or other payment data—on small mobile screens, observers say.
Indeed, mobile abandonment exceeds 90% by some measures. “It becomes incredibly frustrating, that is a universal feeling consumers have when trying to shop on a mobile device,” says James Wester, research director for global payments at IDC Financial Insights.
But for now, One Touch is officially limited to a beta test with “select” merchants, PayPal says. Bill Ready, Braintree’s chief executive, promised in a blog post Tuesday that commercial availability will arrive in the “coming weeks.” Anuj Nayar, a senior director at PayPal, says by email that the company can’t be more specific about how many or what types of merchants are using One Touch in the beta phase. But he adds that next month it will be available to all merchants using Braintree’s v.zero software development kit. “We believe that once we open the general availability of One Touch, merchants are going to integrate quickly,” Nayar says.
One Touch could prove to be a boon to PayPal. The company boasts more than 152 million active users, and if a significant percentage of them adopt One Touch, PayPal could see its mobile volume soar. Already, PayPal’s mobile volume has grown from $100 million in 2009 to $27 billion last year.
“While 50% of consumers browse and shop on their mobile devices, only 10%-15% of buying actually occurs on mobile devices,” says Nayar. “This shows that there’s a major [pain] point to be solved. Consumers are beginning to expect these one-touch experiences and…we believe it will be a boost to the volume of mobile payments.”
One Touch unlocks payment data secured by Venmo or PayPal but does not pass the data to merchants. The first time the consumer uses the technology, he activates One Touch by touching a button that connects a PayPal or Venmo account with the merchant’s app. After that, the consumer can buy from that merchant with a single touch.
Though One Touch is a “pretty smart move” by PayPal, says Wester, he and other observers point out that the company faces competition in the race to streamline mobile payments. Amazon.com Inc. is famous for having pioneered single-click e-commerce, and Apple Inc.’s iTunes store has similarly made it easy to buy music, for example.
Meanwhile, experts also question how One Touch can authenticate users in addition to the device they are using. “The phone itself presents enough information to verify [the device],” says Wester. “The next step is verifying that the person using the phone is supposed to be using the phone.”
