November 28, 2014

PayPal backs out on NFC, focuses on mobile transactions

paypal nfc

In a somewhat surprising turn of events, PayPal has doubled back on their initial support of Near Field Communication (NFC) technology, dropping the development of their NFC mobile point of sale transaction plans. David Marcus, PayPal’s VP of mobile, clarified this move by stating, “By the time NFC catches up, we’ll be in a world that will move away from the point-of-sales terminal.” To this end, they are refocusing their efforts instead on a different sort of payment system wherein your mobile phone number is attached to your PayPal account with a pin code. In a point of sale situation, the PayPal user would choose PayPal at the checkout area and enter their mobile number followed by their pin number; following payment a receipt would be sent to the mobile device attached to the account.

The theory here would promote convenience for the buyer because they wouldn’t have to pull out their wallet or mobile phone, and convenience for the seller because it would require mainly a software update, rather than installing new hardware. As a perk, users of PayPal’s new system would also get a credit card to use when the default payment method was not available.

Here’s my issue with this system. When using a credit card, NFC, or any physical payment system, in order for a thief to use what’s yours at a point of sale, they have to somehow physically take something from you, be it your wallet or your phone. With PayPal’s new system, the thief only needs information: your phone number and your pin. I’m sure there will be safeguards against this sort of thing, but people are already wary of NFC, an arguably secure system (in most situations). Giving them even less control may be a bit much, even for something as splendid as convenience. Time will tell, of course, both for NFC and PayPal’s new system, but this writer won’t be forsaking his wallet anytime soon.

Source: Wall Street Daily, via PhoneScoop