Commentary

PayPal Buying the Quiet Mobile Payments Company

One of the lesser-known companies in mobile payments just got a major boost.

Back in August 2013, I was having a conversation with Chris Gardner, co-founder of Boston-based Paydiant, a company most people have never heard of.

At the time, Paydiant had just completed a deal for Discover Financial Services to market its mobile wallet platform to 6,000 financial institution customers, which I wrote about here at the time (The Mobile Wallets Flying Under the Radar).

The more we talked, the more it struck me that Paydiant was one of the few companies whose mobile payment capabilities are quietly operating behind the scenes with little chance of ever getting any of the glory.

The payment technology works inside someone else’s app, so from the consumer’s perspective, it’s the brand that is supplying the payment capability. In reality, the customer never really needs to know whose digital plumbing is making everything work.

Paydiant was and is content to do all the work behind the scenes and never push its own brand.

This always struck me as a strong, long-term payments play, a main reason being the brand could control its own customer relationships without the payment part being handed off to a third party.

A few months ago, I visited Paydiant’s new headquarters and consumer experience lab just outside of Boston to see what Gardner and team had been up to (Mobile Payments & the Loyalty, Rewards Factor).

Gardner showed me the tight integration of loyalty and rewards with mobile payments.

Anyone who has used the Subway app for payments has seen the work of Paydiant. And when the monster retailer members of the Merchant Customer Exchange introduce their payment system this year, consumers again will see the work of Paydiant.

Those merchants include Walmart, Sears, Target, CVS, Wendy’s, Best Buy, Dunkin’ Donuts and many others.

The other interesting aspect of the Paydiant approach is the use of technology, or more accurately, the approach to it.

The company is technology agnostic and can use NFC, QR codes, Bluetooth Low Energy devices like beacons or pretty much any other technology a brand wants to incorporate with payments.

Payment options also include PayPal.

“We integrated with PayPal a year or so ago,” Gardner told me yesterday.

And the boost to Paydiant? PayPal yesterday announced it is buying the company.

“For us, it’s business as usual,” Gardner said, adding that he is looking forward to gaining access to PayPal’s “world class risk and fraud capabilities.”

The little known Paydiant may be the white label mobile payment platform for retailers. But now it comes with the muscle of PayPal behind it.

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