PayPal exec: It won't be easy to compete with us

In a subtle dig at potential competitors such as Google, PayPal exec says being in the mobile-payments business is harder than saying you're in the business.

Roger Cheng Former Executive Editor / Head of News
Roger Cheng (he/him/his) was the executive editor in charge of CNET News, managing everything from daily breaking news to in-depth investigative packages. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade and got his start writing and laying out pages at a local paper in Southern California. He's a devoted Trojan alum and thinks sleep is the perfect -- if unattainable -- hobby for a parent.
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Roger Cheng
3 min read

Companies hopping into the payments business--with particular focus on mobile--will face unexpected challenges as PayPal did in its early days, according to an executive for the digital payments service provider.

PayPal's Laura Chambers demonstrates the tap-and-pay move at the MobileBeat conference earlier this month in San Francisco with VentureBeat editor in chief and moderator Matt Marshall. James Martin/CNET

"Being in the payments business is harder than saying you're in the payments business," Sam Shrauger, vice president of global product and design for PayPal, said in an interview with CNET today.

While not naming any specific companies, his warning was clearly leveled at players such as Google, which recently unveiled its Google Wallet feature and plans to roll out a payment system in select cities later this summer. Companies that want to deal with payments will have to be ready to deal with customer service, as well as shoulder the risk of financial transactions, Shrauger said.

"Are those problems that they want to solve?" he asked.

Long a facilitator of payments over the Internet and, more recently, through apps found on mobile devices, the company has its sights set on the physical world. Shrauger said the company plans to hold trials with stores by the end of the year, and vowed to be in 20 large retailers by the end of 2012. Spokesman Anuj Nayar said the system would be unlike anything else out there.

Having been in the business for 12 years, PayPal is understandably defensive about the idea of a digital wallet and the notion of having different credit cards, gift cards, and loyalty programs stored in one location accessible by a computer or phone. Google, the wireless carriers, and even the handset manufacturers have only recently began looking to create their own rival mobile-payment systems, and have drawn a lot of attention and buzz.

Most of the industry is focusing on a technology called near-field communications, which allows you to wave a card or phone in front of a checkout reader to quickly pay for drinks at a drugstore or for a ride in a cab. PayPal, however, is taking a slightly different approach.

PayPal is using the Nexus S to test out the NFC payment capability. Sprint Nextel

PayPal isn't going to mandate the use of any specific technology. While Shrauger wouldn't go into detail about PayPal's own plans, he said the company would be more inclusive of different technologies and payment types. Google's plans, for instance, only allow for MasterCard users who happen to have Sprint Nextel's Nexus S, the only smartphone with an NFC chip.

"Relying on a single technology makes it very difficult for the consumer," he said, noting that people pay for things in different ways depending on the situation. He also criticized the focus that the industry and the media have had on NFC, noting that it is one method of payment.

"When you have a hammer, everything looks like a nail," Shrauger said. "We view it differently."

Still, PayPal isn't shying away from NFC technology. The company showed off its own ability to tap phones to transfer money--using the Nexus S.

Beyond simple transactions, Shrauger talked up the opportunity and the need to provide additional services and value to consumers. It's a similar pitch made by executives at Google, or at ISIS, the joint venture between three national wireless carriers. They talk about the opportunity to provide consumers with discounts and promotions, allowing retailers to draw loyal customers.

PayPal will look at using the payment system to deliver daily deals similar to Google Offers and Groupon.

PayPal was in the headlines for different reasons earlier today. The hacktivist group Anonymous lashed out at PayPal and called for a boycott of the service, partly in condemnation of the FBI's recent arrest of those charged in connection with hack attacks by the group. PayPal had been previously criticized by Anonymous for cutting off the ability of the whistle-blowing site WikiLeaks to receive funds through the service.

Shrauger declined to comment on the development. A spokeswoman said the company hasn't seen any fallout from the boycott attempt.

Correction, 4:43 p.m. PT: This story initially misspelled the name of PayPal spokesman Anuj Nayar.