In one, eBay’s PayPal online payments business is equipping some 2,000 of its own employees in San Jose with stickers from a company called Bling Nation that turn any phone into an instant payment device just by tapping it on a sensor. (The sticker tags have small chips in them that can be read by a machine that looks like a normal credit-card swiper.)
Bling Nation is outfitting all of the cafeterias on PayPal’s campus, as well as about 35 other merchants in the area, with readers for its system. PayPal doesn’t have a financial interest in Bling Nation, but the company is using PayPal accounts and technology to fund purchases made through its system.
In the other experiment, a startup called FaceCash has set up a deal with about a half-dozen businesses in the Palo Alto area — including Subway restaurants — to accept its own online payments system instead of cash. FaceCash users download an app for their smartphone, and pay their merchant from a pre-paid account by showing the cashier at the store a unique barcode on the screen of the phone.
The efforts face an uphill battle in convincing consumers and merchants that using their technology is cheaper and more convenient than swiping a credit card. Both companies say it is cheaper for merchants to use their systems than traditional credit cards.
With the proliferation of smartphones, the time might be right: Starbucks is also running a pilot — only at Target stores, and in Seattle and (you guessed it) Silicon Valley — that allows customers to use its iPhone app to make purchases in some coffee houses.
Unlike Bling Nation, Face Cash doesn’t require a sticker; instead, it uses apps. It also doesn’t require that your account be linked to a bank or PayPal account — although you do have to add funds to your account through a bank. Other Silicon Valley merchants that accept FaceCash include yogurt shop Red Mango and several Asian restaurants.
Bling Nation requires no smartphone app — just your phone number, e-mail address and a person identification number to set up one of its Bling tags. The company first focused on building its system in more rural parts of the U.S., such as Colorado, where it made relationships with 14 community banks to sign up users and merchants. Now that users can fund their purchases with PayPal, they want to open up to more areas. In Palo Alto, merchants that accept Bling Nation include Jimmy V’s Sports Cafe, Coupa Café, and Mac’s Smoke Shop.
PayPal already makes its own smartphone apps, which people can use to transfer money, including between each other by “bumping” phones. So why is it supporting a different digital wallet effort?
Osama Bedier, who runs PayPal’s open platform initiative, says that the company wants to become the back-end system to power lots of other novel payment forms. “Our ability to address possible use cases is limited within the internal resources of our company,” he said — but the company is happy to support developers like Bling that want to make use of PayPal’s technology. That said, Bedier said the relationship with Bling Nation isn’t exclusive, and PayPal isn’t going to stop work on its own apps and digital wallet initiatives.
The Bling Nation pilot program is PayPal’s largest to date with its own employees. “If we are going to put this out there and allow them to innovate, we want our own employees to be aware of what companies are doing,” Bedier said.
Follow Geoffrey A. Fowler on Twitter @geoffreyfowler.