Make room in the Burn Book, because Visa is so totally pissed at PayPal right now. This week, a top executive for the credit card issuer slammed PayPal’s new in-store payment service in front of the media at a Goldman Sachs conference in San Francisco.
The new service, which is currently being tested in 51 Home Depot stores around the country, has received some positive buzz from merchants who are excited about the chance to avoid interchange fees on transactions. But according to Visa global head of product Jim McCarthy, the new terminals are underpowered and present “real issues around security.” Ouch.
McCarthy’s biggest qualm with PayPal probably isn’t that the security measures used by the new terminals leave consumers vulnerable to fraud (market competition is the real concern), but the charge does allow for some good old-fashioned, general-purpose, passive-aggressive debasement. McCarthy says that since terminals with the PayPal service only require a customer to enter their mobile phone number and a PIN number in order to validate a transaction, a thief simply needs to look over a consumer’s shoulder in order to steal access to all of their funds.
It would be a solid argument – if Visa’s own mobile payment platform didn’t share the same weakness. Security has always been a concern in the mobile payment market, and Visa’s new “V.me” payment system hasn’t exactly revolutionized the industry. It simply requires a user ID and a password to verify transactions instead of a phone number and PIN. Without any other sort of verification measure in place, it’s just as vulnerable to the peeping tom routine as the competition. On top of that, McCarthy failed to mention that PayPal actually allows customers to put their information on a swipe-able card if they don’t feel comfortable punching it in. So really, there’s no difference between the two company’s security protocols whatsoever.
But the real trigger for the Visa bigwig’s temper tantrum seems to be that a new competitor has emerged in a market that his company has been desperate to dominate. Mobile payment platforms are the future of personal transactions, and though Visa runs the European industry, America is still anyone’s race. Google, Verizon and Amazon are just a few of the companies competing alongside PayPal and Visa to become the favored payment platform in the United States. Visa has already partnered up with PayPal and Google for a claim in the market, but that’s apparently not enough for McCarthy. “We’re now capable of doing 20,000 transactions a second in real time,” he said, going on to state that he doesn’t believe PayPal is “capable of doing what we’re doing at scale.”
Though PayPal remains a dark-horse candidate, McCarthy is right to be concerned. Since the PayPal terminals subsidize interchange fees instead of using them to ream merchants, many retailers have a real incentive to choose the “also-ran” over the market leader. That incentive could end up costing Visa a lot of money.
PayPal has yet to address McCarthy’s statements, so at the moment all we can say is … way to keep it classy, Visa.
Related Posts:
- Visa Gives PayPal A Little Competition - Visa just announced the release of V.me, a new service that works like PayPal’s online payment system. Unlike other PayPal competitors of...
- Visa Takes on New Executive Chairman - Visa has announced that it will be bringing a new executive chairman on board: Joseph Saunders. Saunders is a veteran within the...
- PayPal Looking To Extends Its Reach Offline - PARIS, France – PayPal may be revolutionizing the way consumers purchase goods by turning smartphones into credit cards. PayPal was created in...
- There’s a New Alternative to PayPal, and It’s From (Gasp) American Express - Like three Eskimos trying to share one Snuggie, financial companies are vying for a larger share of your wallet. The credit card...