A pilot program by PayPal that utilizes phone numbers as payment credentials is underway. It is among many other payments technologies that the company is supposedly testing.
The limited trial by payments unit of eBay (NASDAQ: EBAY) is exclusive only to several undisclosed Home Depot locations and PayPal staff members.
“The Home Depot pilot is currently being run in five stores and involves a small number of PayPal employees,” said Anuj Nayar, director of communications at PayPal, in the company’s blog.
Participants are able to ditch their credit cards since the point-of-sale terminal allows them to enter a phone number and a PIN to complete a purchase with their PayPal accounts. As of the third quarter of 2011, PayPal touts over 103 million active accounts.
Here’s a video that shows how it works:
The new payment method comes amid rising popularity in near-field communications (NFC) technology, which allows NFC chip-enabled devices to make “contactless” transactions.
One hurdle with the adoption of NFC has been supportive technology – consumers need to have NFC-enabled devices (primarily smartphones) and retailers have to update their payment terminals with NFC functionality. Both groups aren’t willing to take the dive unless the actual NFC-form of payments gains traction.
In July 2011, PayPal revealed NFC capabilities on their mobile app for NFC-equipped 1345Android devices. It is now among the payments technologies that the company is currently testing.
In December, PayPal began testing in-store NFC payments in Sweden where shoppers downloaded an iOS or Android app and it was used in conjunction with an NFC sticker that was given to them when they visited the store.
However, the payment-by-phone-number method stands a better chance of adoption since no additional or special hardware is required. It may not carry the technological appeal as NFC but, like NFC, it does eliminate the need to carry a credit or debit card.
PayPal has partnered with a point-of-sale software company to expand the payments model to major retailers nationwide, according to TechCrunch.