PayPal at the gas pump?

The payments division of eBay is trying to make inroads at grocery stores and other physical retailers.

By Kim Peterson Feb 16, 2011 2:23PM
Image: Filling fuel tank (© Corbis)PayPal, the shining star within eBay (EBAY), has done a spectacular job of expanding beyond the auction world, but its growth has been tied mainly to online purchases. That might change soon.

PayPal wants to move to the cash register next. It's testing ways to use PayPal to buy groceries and gas, reports Tricia Duryee at All Things Digital. If PayPal gets just 1% of retail sales, it will double its business, executives say.

That's fine to say, but how exactly would PayPal do this? The company is being a little cagey, preferring to keep its testing top secret. But president Scott Thompson gave some clues to AllThingsD.

PayPal has already tried putting stickers on phones. A mobile-payments company called Bling Nation makes a small adhesive square that sticks to your phone and links to your PayPal account. To pay for a purchase, you tap the sticker to a sensor installed in a store. A text message appears on the phone that the cashier types into the console.

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Thompson says that approach won't work for mass adoption, Duryee writes, so he's testing another solution. He told Duryee that it won't require getting fancy new cash registers, and it won't require a plastic card.

"The future is pushing money to the merchant vs. the merchant pulling money from your bank account," he told Duryee. I'm guessing a mobile phone will be involved, but exactly how is unclear.

This makes for a very interesting turn toward huge opportunities for PayPal and its parent company. Ebay is changing from an auction company with a payments business to a financial company with an auction site on the side. Its share price is up 51% in the past year, and that's not because of big momentum in the auction business.

Executives expect PayPal to become bigger than eBay within the next several years, and getting point-of-sale retail access will accelerate that growth in a huge way.

PayPal also wants to do more with micropayments, the small payments you make to get music or apps. The company recently announced PayPal Digital Goods, which completes a purchase in two clicks.


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