PayPal has come to an agreement with The Home Depot to pilot an in-store payment program that will allow customers to pay for goods without using cash or a traditional credit or debit card. The program will initially be tested at only five currently undisclosed locations.
Shoppers at those hardware stores can pay for items via PayPal by typing in their phone number, as well as a personal-identification number, into a payment terminal. The phone number is connected to customers’ PayPal accounts. Customers can also use a plastic card with a magnetic stripe that PayPal plans to issue. The card works like a conventional credit card or debit card and is tied to a PayPal account.
PayPal has spent the past few months demonstrating its in-store payment systems to large merchants across the United States. With the phone number and payment card based payment systems, neither merchants nor consumers have much incentive to switch from traditional POS payment methods to PayPal. However, PayPal is in the process of developing a smartphone based system. Once this is established, merchants will be able to push targeted offers onto the consumer’s mobile device. This ability may prove sufficient in convincing consumers and merchants to change their purchasing habits.