Online payments giant PayPal has forgone agreements with Australian banks and telecommunications companies as it takes on Visa and Mastercard for a share of the increasingly lucrative mobile payments space.
The company this week expanded a payment program that allows consumers to pay for goods at cafes, shops and bars using their existing PayPal account, and a mobile application.
But unlike similar trials from major banks and telecommunications companies in recent years, PayPal's solution has focused on point-of-sale vendors and individual businesses.
Mobile payment trials in Australia to date have focused on complex profit- and data-sharing agreements between banks and telcos, while the recent launch of a Visa online payments gateway that rivals PayPal's existing services also relies on participation from local banks.
"It's just very hard to make that model work," PayPal head of global payments, Hill Ferguson, told The shy;Australian Financial Review.
"I think the more you get more and more industry participants vying for a share of the customer, a share of the transaction, it just gets hard and that's a big reason why we haven't seen [contactless mobile] technology take off in many parts of the world," he said.
He pointed to Google Wallet, a payment trial the search giant began in 2011, which required users to have a specific type of phone, as well as existing relationships with Citibank and US mobile carrier Sprint.
As Visa and Mastercard attempt to take online market share from PayPal, the latter company has ramped up its own competition offline, heavily marketing services that allow consumers to pay with their mobiles, while allowing small businesses to accept credit card payments with a mobile app.
The mobile payments service will be available from next week at thousands of shops around Australia, but lacking support from major department stores and supermarket chains, since it requires shops to change or implement new point-of-sale devices to accept the payments. Mr Ferguson said PayPal had had "very encouraging conversations" with major department stores and supermarket chains, but would not say if agreements had been reached.
"For these types of products to work well you need good merchant density," he said. "What's exciting about Australia is you have these markets hubs like Sydney where we've been able to get out and get really good coverage."
Bitcoin could see mainstream acceptance
Mr Ferguson forecast the burgeoning digital currency Bitcoin could be accepted by the mainstream in the coming years, defying recent claimsit would be relegated only to "geeks".
"Bitcoin is a fascinating development," he said. "It's sort of this ideal currency by design in how it's been conceived and managed, it's got all the properties of the perfect form of money, but . as a stored value it's so volatile today that most consumers would be scared out of their wits to keep real money there."
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