The payments industry has seen significant evolution over the past three years. Continued rapid growth in ecommerce and online payments, the emergence of payment dongles, and increased focus on in-store shopping experiences have all resulted in significant innovation at Point of Sale for brick and mortar stores. Last week, PayPal, which is a key player in this ecosystem, launched an opt-in mobile check-in service experiment in Germany, in partnership with local tablet-based POS startup Orderbird. With this service, a PayPal mobile app user can ‘check-in’ when entering a brick and mortar store (similar to a FourSquare check-in), at which time the store will be able to provide the user with personalized offers and recommendations based on the user’s preferences.

While still transaction-focused, of all the financial services players, PayPal is closest to being a ‘community’ of sorts, since beyond the transaction amounts, PayPal also has information around the transactional relationships within its individual users. If this ongoing mobile check-in experiment takes off, PayPal will be able to build on this community aspect and learn even more about user preferences, which in turn will open up the world of offers and daily deals for the company. This ongoing use-case is not that different from the FourSquare use-case, however what will make this service truly intriguing is when the Bluetooth Low Energy (BTLE) based PayPal Beacon gets incorporated into retail stores to automate the check-in and payment processes. That is when PayPal will be able to more realistically weigh the revenue benefits to it from check-ins and offers against the increased financial risk from quicker, less validated, check-in dependent financial transactions. That is also when the picture might become clearer vis a vis the value of BTLE (and by association, of NFC) for secure, user-friendly financial transactions.

The ongoing experimental service being launched by PayPal and Orderbird might be a small one, but its implications on the future of brick and mortar payments will probably be significant!