PayPal Launches What It Calls a Game-Changer for M-Commerce

PayPal Inc.'s much-anticipated mobile-commerce service made its official debut this week in a development PayPal executive Kevin Dulsky calls a “game-changing” event for the electronic-transactions business. The launch of PayPal Mobile Checkout, which claims at least 20 merchants signed up so far, follows weeks of speculation about the m-commerce version of PayPal Mobile. PayPal introduced Mobile Checkout specifications to developers last month, and earlier in June CardinalCommerce Corp., whose software helps e-commerce sellers enable alternative payments, said it had integrated Mobile Checkout and was making it available to its merchant base (Digital Transactions News, June 5). The arrival of PayPal Mobile Checkout is the latest development of its kind as payment processors begin to move into the nascent market for mobile payments. In March, processor Obopay Inc. rolled out a new platform featuring a payment service aimed at merchants. The service, called Obopay Checkout, now claims six merchants, with four added last month (Digital Transactions News, June 21). And in May, Google Inc., whose Google Checkout online-payment service is locked in a fierce rivalry with PayPal, announced it is now supporting mobile payments for Checkout merchants with Web sites configured for the mobile Internet. Major wireless carriers are also signing on, with AT&T Inc. (formerly Cingular Wireless) now supporting PayPal Mobile and Verizon Communications Inc. adopting Obopay's application. Verizon also supports PayPal Mobile. “A lot of merchants are looking to go beyond brochureware and do transactions [on handsets],” says Dulsky, senior director for PayPal Mobile. “The question has always been, 'How do I get paid?'” At the same time, the mobile channel opens up a market consisting of merchants whose products and services may be uniquely suited to the wireless, rather than the wired, Internet. “There's a whole new genre of electronic merchants who aren't going to do fixed Internet,” says Dulsky. “They'll go straight to mobile.” He cites parking as an example, a service that people could pay for on the spot via handsets but not in advance through PCs, since they can't know where they will park or what the charges will be. PayPal Mobile Checkout is the latest addition to PayPal Mobile, a set of services introduced in April 2006 that includes a person-to-person payment product and services that allow consumers to use text messages to buy items and make charitable donations. With Mobile Checkout, merchants can sell some or all of their product lines via WAP (Wireless Application Protocol) sites, which are Web sites specially configured for mobile-phone screens. Consumers enrolled in Mobile Checkout can complete a payment with two clicks and entry of a mobile PIN. In a process similar to that of PayPal Express Checkout, a streamlined e-commerce system PayPal introduced two years ago, Mobile Checkout users click on a PayPal link, go to PayPal for login, click an okay button, and then return to the merchant site. PayPal sends to the merchant the customer shipping address, e-mail address, and other data necessary to fulfill the order. Merchants signed up so far represent a wide array of products, from CDs and DVDs to housewares, plasma TVs, and seasonal items, such as Halloween costumes. Merchants include SkyMall, an online catalog, DVD Empire, and Moosejaw Mountaineering. Still, Dulsky says not all online merchants, or products sold on the fixed Internet, are suited to m-commerce. “If it takes you five clicks to configure an item you want to buy, it doesn't lend itself well to mobile commerce,” he says. “It's less likely Dell would do this than Apple iTunes.” Merchant fees for Mobile Checkout, he says, are “very similar” to PayPal's online pricing, though he won't be specific. For online transactions, PayPal charges merchants 1.9% to 2.9%, plus a fixed fee of 30 cents. Besides CardinalCommerce, another company enabling Mobile Checkout is mPoria Inc., which builds mobile Web sites for merchants (Digital Transactions News, May 4).