PayPal could be coming to a gas station near you.
The payments giant announced yesterday that they’re collaborating with retail and commercial fueling servicer Gilbarco Vender-Root in order to make PayPal an accepted payments method at tens of thousands of gas stations and convenience stores around the U.S.
PYMNTS.com spoke with Kareem Al-Bassam, director of business development for POS at PayPal, to discuss what consumers, businesses and merchants alike can all gain from the partnership, and what the Gilbarco deal means for PayPal as it pushes forward in 2013.
According to Al-Bassam, the Gilbarco deal represents part of an initiative that PayPal announced at the National Retail Federation’s convention back in mid-January. At NRF, PayPal announced its partnership with NCR Corporation in an attempt to bolster its status in the restaurant industry. Now, the Gilbarco deal represents PayPal’s goal of continued expansion into new verticals and markets.
“This is a continuation of our advancement into the vendor space, in fuel in particular, and this is just continued momentum to show we’re building ourselves into infrastructure that merchants in all categories use to enable their payments and technology,” Al-Bassam said.
Gilbarco works with 19 of the top 20 convenience store operators in the U.S. and has 150 years of experience in the convenience and fuel industries, making it an obvious target for a company like PayPal.
“This is a very interesting vertical for PayPal in the everyday spend category. It’s a place that consumers go often and a majority of the American population is served by a convenience store every two days.”
Gilbarco, on the other hand, gains access to a huge new user base in the deal: namely PayPal’s 125 million global users, and the 55 million Americans who use a PayPal account right now. As Al-Bassam notes, it’s not just the volume of users that PayPal brings to Gilbarco, but also the type of user that makes it an attractive payments partner.
“We bring a large customer base, number one, but secondly we bring a customer base that is more likely to pay in new ways and pay mobile,” he said.
From a consumer standpoint, the ability to pay with PayPal at the pump has obvious appeal. Consumers can save time and eliminate the need for cash or card by using their mobile devices to pay, and as we covered in a recent Data Point, most digital wallet users are PayPal users anyway.
To illustrate how PayPal could be of use to consumers at the pump, Al-Bassam gave the example of a mother with children in her car who wants to minimize the amount of time she needs to spend leaving those children in a car unsupervised.
Al-Bassam pointed out that PayPal can be used by businesses with fleets as well, as using PayPal can eliminate the need to provide individual drivers with cash or to make drivers fuel up at corporate stations.
“There are a number of different use cases and reasons why people would want to use this sort of capability, and at PayPal we’re about opening up that opportunity for consumers and small business,” Al-Bassam said.
Aside from gaining access to PayPal’s user base, merchants using Gilbarco equipment will also benefit from the ability to sell additional items through PayPal Wallet. In Al-Bassam’s estimation, this ability could help them recoup some of the non-fuel losses they’ve experienced as the fuel industry has undergone change.
“You’ve seen a lot of technology changes in fuel over the last 20 years, like moving to pay at the pump, which has positives and negatives for the merchants. It means that there was a decline in consumer traffic into the store, where they were buying upsold products at a higher margin,” Al-Bassam noted.
“By leveraging PayPal and leveraging mobility, we see that these merchants will be able to sell more - sell the carwash, as an example, on the app, or sell in-store products or sell products that are sitting in the forecourt that a consumer can grab-and-go with,” Al-Bassam explained. “That helps merchant businesses by increasing their margin, and fuel is a notoriously low-margin vertical.”
Initially, the integration will allow any site with Gilbarco’s Passport Point-of-Sale platform to accept PayPal payments, but in the future PayPal will be integrated into more of Gilbarco’s “suite of media and merchandising applications,” according to a company press release.
To read more of PayPal’s thoughts on the deal, view their blog post here.