PayPal rallies 15 retail partners for in-store payment drive

PayPal (s ebay) on Thursday unveiled 15 national retail partners that will support its in-store payment system, which is set to compete against the likes of credit cards and other emerging payment tools like Google Wallet (s goog). It also launched a new mid-market payment tool for medium-sized businesses with multiple locations.
The announcements, made at a press event Thursday, were aimed at demonstrating the progress PayPal is making in bringing its payment system from the online world into the offline world of retail. The online payment giant has been moving aggressively in bringing alternative payment tools to brick-and-mortar businesses, from small shops to large retail chains.
PayPal’s 15 new national retailers include: Abercrombie & Fitch, Advance Auto Parts, Aéropostale, American Eagle Outfitters, Barnes & Noble, Foot Locker, Guitar Center, Jamba Juice, JC Penney, Jos. A. Bank Clothiers, Nine West, Office Depot, Rooms To Go, Tiger Direct and Toys “R” Us. The names help bolster PayPal’s larger retail strategy, which has been unfolding over the course of the last year. The company announced Thursday morning it  had lined up the top three point-of-sale terminal makers, who represent 40 million terminals worldwide. And it previously began recruiting big retail partners, including Home Depot, the first big-box seller to adopt PayPal.
PayPal still has to convince consumers that it’s worth it to adopt another payment form beyond cash and credit. With PayPal, consumers can pay with a pre-paid card and PIN or by entering in their phone number and PIN. That provides some convenience in the event that someone doesn’t have their wallet. But that’s often a rare case. The real benefit PayPal will be providing is more personalized offers, loyalty rewards and payment flexibility, including the option of changing the funding source after a payment. Those features are still in the works but PayPal believes it will be these added value tools that will be attractive to consumers and merchants.

But before PayPal can even make that pitch, it needs to be where consumers are. No payment system is really attractive if it’s just available at a patchwork of stores. So that’s why the announcement today is important. It shows that consumers will have a number of familiar places where they can use PayPal in store. The initial retail partners, however, are just a sliver of the top retailers PayPal will need to create a truly comprehensive offering. The real test will be to see who else PayPal can get to support its payment system.
This is going to be a critical part of the competition with other mobile wallet initiatives. Each one requires some retailer integration to work optimally and in the case of NFC wallets like Google Wallet and Isis, you need NFC-equipped terminals. Google Wallet has worked out deals with Macy’s, the Gap, Walgreens, Bloomingdales, American Eagle and others, but there’s still a lot of retailers to sign up. PayPal has an advantage because it doesn’t require an NFC-reader to work.
PayPal also announced that it has struck deals with point of sale software providers Leapset, ShopKeep, Vend and Erply, who work in more than 50,000 mid-market businesses. Merchants who use these systems will be able to begin accepting PayPal payments thanks to PayPal’s integration with these software providers.
PayPal has said this year is still experimental, as it learns how to roll out its payment system. But it’s showing good progress in making its way into retail stores, though a lot more work needs to be done. But the bigger challenge will be to get consumers to really respond to its payment system. Cards and cash work fine for most and those aren’t going away.