While Apple Waits, PayPal Uses Acquisitions To Expand Its Mobile Payment Features

While Apple Waits, PayPal Uses Acquisitions To Expand Its Mobile Payment Features

With PayPal’s acquisition of card.io mobile credit/debit payments could become as easy as snapping a photo.

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.

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  • mr_bee

    This is kind of misleading. “card.io” provides a service that doesn’t really have anything to do with NFC or “mobile payments” per se. it’s also clearly a very low security, mickey-mouse kind of thing that Apple wouldn’t touch with a ten foot pole.

    The implication that Apple is somehow “losing out” or that PayPal “stole this one” etc. is not justified at all.

  • davester13

    Paypal. Motto: We will make you wish you never heard of us.

About the author

Ryan FaasRyan Faas is a technology journalist and consultant living in upstate New York who has written extensively about Apple, business and enterprise IT, and the mobile industry. In addition to writing for Cult of Mac, he is a contributor to Computerworld, InformIT, and Peachpit Press. In a previous existence he was a healthcare IT director as well as a systems and network administrator. Follow Ryan on Twitter and Google +

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