Bluetooth-based beacons, which detect when customers enter a merchant's store, will dramatically change how businesses manage identity, payments and customer engagement, said Patrick Gauthier, PayPal's head of emerging services.

Beacon technology could be even more significant than the U.S. migration to EMV-chip cards, he said. The U.S. shift to EMV, which is being driven by the major card brands, is a sweeping overhaul to payment-card security affecting consumers, merchants, card issuers, acquirer processors, ATM operators and other entities involved in handling card payments.

"EMV will solve a few billion dollars in fraud, but it won't create intrinsic value as retailers redefine payments and shopping," Gauthier said at the Cartes America conference this week in Las Vegas. "That value comes from recognizing a person for who they are before the point of sale."

PayPal was one of the first companies to offer Beacon technology as a way to tie identity management to marketing, customer analytics and mobile payments. The device, which uses a Bluetooth Low Energy (BLE) signal to communicate with a consumer's PayPal app, is also designed to help the eBay unit's push to become a major in-store payments provider.

Beacon can help match a type of customer engagement to a corresponding point in the shopping lifecycle, Gauthier said. Gauthier graphed customer experience as a matter of distance from actually paying for something, saying that the earlier a merchant can reach a consumer with personalized data-driven messaging, the better.

By contrast, the EMV standard was developed before mobile commerce came about, and as such is not equipped to changes in authentication technology that enable more targeted marketing.  Gauthier did not suggest merchants avoid EMV, but said the standard did not address all of a merchants' emerging needs, requiring a broader focus for merchant IT upgrades.

"One of the things I'm concerned about regarding EMV, which was designed in 1995, was that is disconnected from the need to bring all of these shopping elements together," Gauthier said.

Apple, Shopkick and many other companies are also adopting beacon technology in an attempt to improve payments and marketing.

"Retailers are at a juncture with a lot of problems to solve," Gauthier said. "They also have to deal with companies like Amazon and the changing habits of the consumer that will cause retailers to change the entire IT infrastructure that manages their business."

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