While Apple’s taking a wait and see approach to the nascent mobile payments and digital wallet industries, PayPal seems ready to launch an all-out offensive. In addition to its existing assortment of mobile, local, and online payment systems, PayPal announced this week that it is acquiring startup card.io.
card.io currently works with a range of iOS and Android developers to help them integrate mobile credit/debit card payment capabilities into their apps without the need of additional hardware like Square’s card reader or PayPal’s Here card reader. Instead, card.io’s partners use the built-in camera of an iPhone (or other iOS or Android device) to snap a photo of a credit card. The card number and related information is extracted and passed to a payment processor to complete the transaction (manual keying in a card number is also supported as a backup).
The approach works very much like the feature in PayPal’s iPhone app that allows you to deposit checks directly into your PayPal account by snapping photos of the front and back of an endorsed check.
Although card.io developed the technology to facilitate transactions, it has focused more on providing an SDK that other companies can use to build camera-based transactions into their new or existing apps more than on developing a direct-to-consumer product.
The technology is a natural extension of PayPal’s existing range of services – most notably the PayPal Here system, which uses a reader to accept credit/debit card transactions in the same manner as Square’s card reader, and its new PayPal Local feature that lets users buy items from local businesses using their PayPal account and pick them up in person.
It seems likely that PayPal will focus on using card.io’s technology to replace its own card reader hardware. The company may also plan on expanding the base of customers that card.io has already built.
PayPal is no stranger to using acquisitions to advance its feature set. Last summer, the company purchased Zong, a company that specialized in carrier billing as a mobile payment mechanism
It’s worth mentioning that PayPal appears to be the leader in mobile payments at this point (with Amazon and Apple neck-and-neck for second place) compared to startups or partnerships built around the NFC-based concept of a digital wallet.