PayPal and Bling Nation

Ebay yesterday reported that PayPal tripled its mobile volume in 2010, a clear demonstration of the increased adoption of mobile payments.  To capitalize on this trend going forward, PayPal is increasingly targeting physical payments and has forged a number of partnerships to support this effort.  However, one partner has stood out from the rest; Bling Nation.

Bling Nation was founded by Meyer Malka and Wenceclao Casares in Palo Alto in 2008.  With Bling, they enable mobile phones for NFC payments with an RFID sticker, or Bling Tag, that is distributed for free.  Users simply register their phone number and PayPal account to their Bling Tag and are able to make purchases by tapping the tag on a contactless terminal.

To facilitate merchant acceptance, Bling initially partnered with local banks that would have cardholder and merchant relationships in the local area, to whom they would distribute NFC stickers and terminals.  The advantage of this approach was that transactions were ‘on-us’, which enabled Bling to offer merchants a cost effective solution.  On the flipside, each partnership was relatively small and growth was slow.

To achieve national scale, Bling has entered a partnership with Verifone, in which Verifone’s more than 370 resellers will begin to offer the Bling and PayPal service alongside traditional credit and debit card acceptance to merchants nationwide.  This is the first implementation that combines traditional cards-based payments with alternative payments at the point of sale.

The downside of this approach, is that PayPal transactions are charged at ‘card not present’ fees, and therefore adds unnecessary costs in a physical environment.

Interestingly, co-founder Casares views payments as the “commodity part”.  The value-added of Bling comes from connecting customers and merchants through data services and rewards. 

In the “marketing services” space, Bling has partnered with Facebook, as well as other online communities, where customers register to get access to discounts and rewards and merchants get access to customer data and profiles to drive increasingly targeted offerings.

It is this perspective that differentiates Bling Nation from other mobile payments providers and makes it such an attractive partner for PayPal, Facebook and a host of other companies that will want to leverage Bling’s growing network.