In the world of mobile payment companies, it look we are entering an era where brands are measured by their latest conquest. Just a week after Square announced that it secured Starbucks as a client for its mobile-phone based payment service, PayPal appears to be in the early stages signing a deal with McDonald's.
McDonald's is testing a version of PayPal's mobile payment system in 30 of its restaurants in France, according to Reuters.
As PayPal clamors to fight the strengthening hand of Square, many wonder what the future will look like if the mobile payment market becomes highly fragmented.
When Square struck a world's largest coffee chain last week, the company showed its ability to translate a small business aid into a tool that can improve efficiency and customer retention by offering a new and easier way to pay. Now it looks like PayPal could get the same perk, but from the world's largest hamburger chain.
PayPal already signed up more than 15 retailers, including Home Depot and Office Depot, to use its service in their stores but McDonald's comes with more than 30,000 restaurants, compared to the 7,000 stores snagged by the Starbucks deal.
The test going on in France allows McDonald's customers order food via a McDonald's app on their smart phones and pay with PayPal -- then consumers can go straight to a designated line to jus pick up their order.
My real question is why PayPal is running this test in France and is it targeting the French market or the tourists with this offering.
McDonald's business strives on speed and efficiency, so it seems obvious that any tool providing greater accuracy in orders and reduces the amount of time people are standing in line would be a clear win for their business model and their customers.
Electronic payment is a market that is growing fast, and many companies are trying to get into it early on. A report earlier this year found that a vast majority, around 65%, of experts agreed that smartphone payments would be mainstream by the end of this decade.
Gartner predicts that by 2016, mobile payments will reach $617 billion worldwide, up from $105 billion last year. By that point, Gartner forecasts that smartphones will account for two-thirds of all phones. Mobile payments this year are expected to reach $171.5 billion—a 60% increase over last year.
Credit card processing fees generate some $40 billion a year for major banks like JPMorgan Chase and Bank of America.
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