As reported by Reuters late last week PayPal is in a pilot with McDonald’s France to test mobile ordering and payments:
McDonald’s is testing a mobile payments service featuring PayPal at 30 of its restaurants in France. Earlier this year, McDonald’s ran demonstrations of a broader PayPal mobile payments service at its franchisee conference in Orlando, Florida. A McDonald’s spokeswoman confirmed the France tests and said the PayPal demonstration at its conference was part of a booth that features “technology coming within the next 24 months or so.”The concept is that people would order on their mobile handsets and then pick-up that order in a McDonald’s location via an express line. However the idea that this system might be coming “in the next 24 month or so” is problematic for PayPal. As the article points out the company is in a kind of land grab or race with other payments vendors but especially Square, which established a major beachhead with its recent Starbucks deal. In the past this probably would have been PayPal’s deal. It now legitimizes Square as a viable alternative to PayPal for larger enterprises. PayPal has existing in-store payment relationships with Home Depot and Office Depot. Several months ago I used the PayPal system at Home Depot and was unimpressed. There was no real benefit vs. a conventional card swipe. It also didn’t expedite the transaction. However PayPal has international scale, which at the moment Square does not. It’s also true that there won’t be a single winner in the mobile payments segment. Multiple consumer-facing companies and apps will likely co-exist. Unlike the Home Depot-PayPal arrangement, which offered no apparent benefit or time savings, the McDonald’s trial does offer convenience and time savings to end users. Getting a payments relationship in place is only the first step. Once these payments systems are in place they become a source of data and a basis for marketing and CRM initiatives.