SAN JOSE, Calif.—In a move analysts say indicates PayPal isn’t giving up on payments in brick-and-mortar stores, eBay’s payment unit plans to acquire payments platform Paydiant.
Sources say the move benefits credit unions seeking to launch their own white-label mobile wallet solution, and underscores how Apple Pay’s introduction has rapidly accelerated the advancement of mobile payments.
Reports indicate PayPal will pay approximately $280 million for Paydiant.
Paydiant’s white-label platform is used by many retailers and banks to add payment, loyalty and digital coupon capabilities to their own apps. Its customer list also includes MCX, a consortium of big-box retailers led by Walmart that says it will launch its own mobile wallet app, CurrentC, later this year.
In a statement, CUSO CU Wallet—which offers a white-label digital wallet solution to CUs—said PayPal’s move is a “clear and public validation of CU Wallet’s credit union-driven mobile wallet strategy.
“Our credit unions’ members want to be able to manage their money, access funds and make payments with their mobile device, regardless of which handset they carry, whether Apple or Android,” said Karl Cherry, chief product officer for CU Wallet. “The PayPal transaction brings a vast acceptance network to our technology strategy, and the resources to rapidly expand the ways and places our members can shop and do business.”
The Paydiant platform stores mobile payment credentials in the cloud, and works with NFC, QR codes and Bluetooth low energy.
“Today’s announcement further solidifies our goal of providing a secure, convenient and valuable mobile payment platform to credit unions that is branded and controlled by the individual credit unions as a primary member service touch point,” said Paul Fiore, CEO and founder of CU Wallet.
Several studies have indicated that consumers prefer to use a mobile payment solution offered by their financial institution.
“PayPal recognizes that preference, and has thrown their support to a platform which empowers both financial institutions and retailers to provid
e mobile payments functionality in their own apps, in ways that best serve their members or customers,” said Fiore.
CU Wallet currently has multiple credit union members testing the mobile wallet in a live environment and is developing credit union-specific service extensions on top of the Paydiant platform, the company said.
“We’ve always viewed our partnership with Paydiant through CU Wallet as an invaluable part of our mobile wallet strategy,” explained said Paul Parrish, CFO for the $730-million One Nevada Credit Union in Las Vegas. “This announcement demonstrates that value will continue to grow. Following this acquisition, we now have greater access to resources and infrastructure giving us the ability scale.”
CU Wallet stated that it expects to further leverage its open and secure architecture for tokenized transactions, for new clearing and settlement arrangements directly with retailers.
Richard Crone, principal of Crone Consulting LLC, San Carlos, Calif., said PayPal buying Paydiant is a win big for credit unions. “Because CU Wallet credit unions are already using this platform, they now pick up all of the capabilities of the PayPal infrastructure to layer on new services.”
Crone, added that Apple Pay has generated a great deal of momentum within the mobile payments marketplace.
“We have Apple Pay to thank for jump-starting this market.”