EBay (NASDAQ:EBAY) subsidiary PayPal is set to hit the bar scene with a new mobile payment partnership with startup Tabbedout. The teaming will update the Tabbedout payment system — which is designed to allow users to pay restaurant and bar tabs with a wave of a properly enabled mobile device — to also include the option of checking out with PayPal.
Tabbedout is currently available in 400 establishments nationwide. The PayPal integration will launch in Austin before its full rollout. Naturally, the Tabbedout system relies on the willingness of the bar or restaurant to allow customers to create a tab. Customers download the Tabbedout app, available for both Apple’s (NASDAQ:AAPL) iPhone and phones equipped with Google’s (NASDAQ:GOOG) Android, and securely link it to a credit or debit card account.
A Tabbedout card account will be required to open a tab even if PayPal will be used as the final payment method. Card information is encrypted within the mobile device, although the usual PayPal secure checkout method can be used to pay the bill.
The Tabbedout app allows users to find participating restaurants nearby using the phone’s GPS. Separate tabs also can be created and divided among friends using the application. The final bill is itemized and users must verify the payment method, preventing any mistakes at checkout. Checkout doesn’t require the presence of any special device on the table, unlike the competing mobile vendor project from Viableware or a similar offering from POS equipment specialist VeriFone (NYSE:PAY) and Micros Systems (NASDAQ:MCRS).
Touting the PayPal brand
Tabbedout software can accommodate an estimated 70% of the point-of-sale (POS) systems in qualifying establishments in the U.S. The company hopes to expand beyond its current coverage in the coming years, and the partnership with industry leader PayPal is expected to help the push toward that goal.
PayPal has spent the past couple years extending its reach to bricks-and-mortar locations, a move many speculated would have happened before now. Two thousand Home Depot (NASDAQ:HD) stores nationwide are poised to accept PayPal at the register. Shoppers can use the store’s card payment screen to enter login information, a phone number and a PIN to complete a transaction and eliminate the need to carry cash or a credit or debit card.
Mobile payment methods are a booming industry, according to findings by research firm Parks Associates, which predicts the sector will generate billions in revenue before 2015. PayPal processed $4 billion in mobile payments last year and predicts $7 billion for this year. Competition is nipping at its heels with the Android integration of Google Wallet and with a project called Isis, a wireless payment venture that uses near-field communication (NFC) technology to allow mobile payments for goods and services. Isis is supported by three major wireless carriers, VeriFone, and major credit card companies, among others.
PayPal has a decent shot at gaining ground in this emerging, rather crowded market due to its brand recognition, ease of use for the customer, and ease of integration for the merchant.