PayPal is extending its "One Touch" payment technology, obtained through its 2013 purchase of Braintree, to the Web, giving the eBay unit a significant new offering as it prepares to split off on its own.
One Touch allows consumers to pay without user IDs and passwords after they log in once. The technology is used in Venmo, a social payments platform that Braintree owned, and includes tools that are transferrable to other types of digital payments.
"The importance of Braintree to PayPal's post [eBay] future cannot be understated," said Jordan McKee, a senior analyst at 451 Research. "Clearly Braintree's technology and leadership is working its way into PayPal's core business already, and this is a trend that will only continue to manifest itself as the year progresses."
PayPal has long wished to extend the One Touch technology to a broader set of consumers and merchants. Leveraging the technology tools it's picked up over the years through acquisition will be vital to PayPal's mission to distinguish itself as an independent company.
Airbnb, Boxed, Jane.com, Lyft, Muncery, and Yplan are among the mobile merchants that have adopted the app-based version of One Touch, which PayPal released in 2014. One Touch, and Yplan reported a double-digit increase in conversions since adopting One Touch, according to PayPal. PayPal also said StubHub reported a double-digit increase in total sales and transactions through PayPal on iOS since enabling One Touch for mobile in the fall of 2014.
"On average, it takes up to two minutes to fill out payment, billing and shipping information. With One Touch this speeds up the checkout to only a couple of seconds," said Anuj Nayar, senior director of global initiatives for PayPal, in an email provided by PayPal's public relations team.
One Touch also allows PayPal to compete on user experience, a major front in the battle among mobile and electronic commerce companies.
"The user experience for completing transactions has been transformed by both Amazon One-Click Buy and Apple Pay," said Thad Peterson, a senior analyst at Aite Group, adding Amazon has trained consumers to expect a simplified payment experience.
Though Amazon offers a wide range of merchant services, the e-commerce giant may encounter resistance among merchants who view it as a competitor. PayPal will not have that problem after its split from eBay is finalized, Peterson said. "PayPal can leverage its customer base and add value to a retailer's offerings with a one-click offering across all channels."
Both merchants and consumers want a simpler checkout process, particularly as commerce moves to more types of mobile devices, experts say.
"It is well known that removing friction from shopping, and particularly checkout, helps merchants increase conversion rates and sales," said Zilvinas Bareisis, a senior analyst at Celent. "And consumers love it as well. No one likes typing in their details every time, especially on a small screen."
PayPal should also benefit from the timing, McKee said, noting a recent survey by 451 Research found 22% of merchant respondents are using third-party checkout solutions more often because of retail data breaches, up from 18% the year before. "Since it controls $1 out of every $6 spent online, any move PayPal makes to simplify the purchase process should be watched closely," McKee said.