PayPal face payments: game-changer or gimmick?
Ever since its launch over a decade ago, PayPal's people-friendly technology has continued to evolve to meet the needs of the changing payments landscape. Founded in 1998, the company shot to 1m users after just 15 months and now boasts over 130m active accounts across 193 markets around the world. It comes as no surprise then, that when these payment giants announce yet another innovative offering, people sit up and listen, writes Sascha Breite
Ever since its launch over a decade ago, PayPal’s people-friendly technology has continued to evolve to meet the needs of the changing payments landscape. Founded in 1998, the company shot to 1m users after just 15 months and now boasts over 130m active accounts across 193 markets around the world. It comes as no surprise then, that when these payment giants announce yet another innovative offering, people sit up and listen, writes Sascha Breite
Incorporated into the existing app, PayPal’s new technology allows shoppers to pay with their face. Launched in a pilot scheme across a selection of independent stores on Richmond high street, the service uses GPS technology to enable customers to find participating stores and ‘check-in’. Once the desired item has been selected, merchants simply need to tap the customer’s profile picture, which appears on their own smart device, and the payment is processed.
PayPal is optimistic about its new offering, predicting that more than 2,000 merchants will be accepting face payments by the end of 2013. Moreover, Rob Harper, head of retail services for PayPal, described the move as "another step in the journey towards a wallet-less high street", predicting this will be a reality by 2016.
The payment giant is certainly not alone in the bid to remove the wallet from the high street essentials list. This month has seen Facebook announce a mobile payments feature, while discount stores Lidl and Aldi joined the contactless payments wave and Germany’s Ministry of Finance formally recognised the Bitcoin. But does PayPal’s latest trend have what it takes to become a mainstream service?
The technology presents some clear benefits to both the consumer and the merchant. For one thing, encouraging merchants to recognise their customers by face is likely to foster a friendly atmosphere, which in turn could see merchants earning loyal customers.
Moreover, this service is a fun new system, which is likely to appeal to the younger generation. Young people have already demonstrated an interest in mobile payments – research from VocaLink, operator of the UK payments infrastructure, found that 32% of 16-24 year olds in the UK are interested in using mobile payments in the future.
However the younger generation that has grown up with the openness of social sharing is not representative of the wider consumer demographic. In March 2013, The Logic Group and Ipsos MORI released research revealing that ‘trust’ is one of the biggest barriers to mobile payment adoption, with only 30% of British consumers trusting major retailers to keep their personal information safe.
Many people have concerns when it comes to sharing their personal payment information via mobile and these issues are likely to be exacerbated by PayPal’s latest service, as it will allow the company greater access to more detailed information than usual. In addition to the profile picture, the checking in option will inform the payment giant not only what consumers are buying, but when, where and how often.
Moreover, there are some practical concerns that suggest adoption of PayPal’s technology will not be as widespread as hoped. For example, large retailers cannot provide every staff member with the smart device required to confirm the purchase. Even SMEs may struggle in the occasion that a tablet or smartphone is lost or broken, as they are expensive to replace. If PayPal’s new service is to truly revolutionise the high street they will need to think about working with electronic cash register (ECR) software vendors to incorporate the technology into general service at tills.
Despite the consumer concerns, it cannot be denied that mobile payment technology is a growing phenomena – PayPal alone expects to process £20bn in mobile transactions this year. But whether face verification will be the catalyst behind this is something I highly doubt.
Paying with your face is a fun gimmick and I welcome any technology that boosts the user experience of payments. However, the service appears to lack the wider applicability required to turn this into a mainstream payment method. Mobile payments and wallet-less transactions certainly appear to be the future of the industry, but it seems to me that face verification is very much of the moment.