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PayPal Introduces Payment Code for POS Purchasing

PayPal logo 140x60pxIn a blog post this morning, PayPal's Don Kingsborough, VP of Retail Services, introduced "payment code" - calling it "yet another innovation that’s part of our payments roadmap."

"This new technology will enable you to make purchases by scanning a QR code on your mobile phone, or receive a short four-digit code on your phone, to complete a purchase," said Kingsborough.

"Payment code is an extension of our offerings for enhancing the payments experience in-store. Our approach isn’t to push technology for technology’s sake, but to truly make the paying experience better for consumers and to give merchants more opportunity to innovate without a costly investment. Payment code is easy to use and understand and utilizes a ubiquitous technology that merchants have and are familiar with."

Here's how PayPal says it works:

When you’re ready to pay, simply open the PayPal app (or the specific merchant’s app.) and check in. Once you’re checked-in at that location, the app prompts you with a QR code, or a four-digit short code, to authenticate your purchase.

If the merchant has a barcode or QR code scanner, the merchant scans and, just like that, you have paid. If the merchant doesn’t then a four-digit code pops up on your phone, you (or the merchant) simply punch that code into the PIN pad at checkout. Boom, done!

PayPal says that the real benefit of payment code isn't convenience - existing payment methods work for payment - but that PayPal with payment code "will allow consumers to automatically redeem any special offers, gift cards, merchant rewards programs or other forms of payment that might be saved in their PayPal wallet in one quick transaction."

On the merchant side, PayPal says they "want to get the benefits of these new ways to pay but they don’t want to rip out their existing technology to do it." PayPal says it will also be working with merchants who have their own mobile apps to integrate PayPal QR codes into the merchant's own app.

Kingsborough said that PayPal will roll out payment code globally in the first quarter of 2014 and will provide more details at that time.

Yesterday, PayPal published a new white paper titled "The Future of POS: Point of Sale Evolution and its Impacts". In a blog post announcing the paper's availability, Scott Ellison noted that "the industry is poised to undergo a profound transformation in the next several years because of new key drivers, which include the mobile phone, cloud technology, sensors and the proliferation of tablets entering the market."

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