Over the last eight years, smart devices meant for consumer use eventually found their way into some kind of retail environment. That started with the iPhone in 2007 and continues today with an assortment of smartphones and tablets.
Microsoft envisioned a similar outcome for its smart devices, specifically the new Surface Pro 3. And now a partnership with PayPal makes it possible for merchants to accept card payments with PayPal Here on any device that runs the Windows 8.1 operating system. PayPal also released an SDK to enable software developers to create ancillary services such as inventory management and customer engagement programs such as loyalty that can be paired with PayPal Here on Windows.
Up until Tuesday's announcement, PayPal Here was compatible only with iOS and Android devices. PayPal's partnership with Microsoft gives it yet another conduit into the physical world and a leg up on similar providers such as Amazon Local Register, Intuit GoPayment or Square, whose dongles are not compatible with Windows devices.
"To me, the most important piece [of the mobile point-of-sale market] is to provide solutions that are flexible enough to meet the needs of all types of merchants, and that's why this partnership with Microsoft is so important for us," Brad Brodigan, PayPal's vice president of retail at PayPal, said Tuesday at a luncheon with media members at eBay's offices in New York City. "Not only are we providing the PayPal application on the Windows network, but we're also providing the PayPal Here SDK to the developer network to create customized services."
Brodigan expects most of the services developers create for Windows will focus on customer engagement, which was a much-discussed topic at this past week's NRF annual Big Show trade show. Retailers want to solidify a link between the mobile and in-store experiences, but often fail to find the most beneficial way to do so because, as one panelist at NRF put it, merchants are not technology companies. That's where something like SDKs come into play to enable third-party developers to create new experiences for retailers, especially small and medium-sized businesses.
In PayPal's case, the combination of its consumer-facing app that has a photo check-in feature with Here can create different engagement opportunities for merchants.
"The most important piece [of mobile payments] is loyalty," Brogan said. "If you implement that type of loyalty in smart interaction environment, it's incredibly powerful.
"It's all about differentiating the experience, knowing who your customer is and getting to know them in a better way, and then acquiring and retaining customers better than your competition. That's the promise of mobile payments."
As for Microsoft, the PayPal partnership fulfills a vision the company had for its newest Surface when it was released last year.
"One of the things we bet on was this exact scenario," Panos Panay, the corporate vice president for Surface, said during the luncheon about the tablet's ability to act as an mPOS device.
Microsoft's pitch for the new Surface is simple: It's a tablet intended to replace your laptop. You've seen the TV commercials. In a retail environment, the idea for the Surface is that a store associate can let it sit in a docking station and then pick it up at a moment's notice to roam the store with a customer and accept payment, view inventory selection and initiate other types of engagement the merchant wants to implement. And at the end of the day, a business owner can take the Surface home and manage their operations remotely.
"We're trying to push the Surface's flexibility as a computer and tablet," Panay said. "You have to step back and believe you have two devices in one."
PayPal also announced Tuesday that it will also release an EMV contactless-enabled reader in the U.S. later this year. The reader is already available in Australia and the U.K.
/ Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.