PayPal Taps Braintree Tech to Test 'One-Touch' Mobile Payments

Braintree and PayPal are testing an integrated mobile payments feature, delivering on the company's promise to integrate technology from Braintree's Venmo unit.

The new service, called One Touch, will enable consumers to enter their credentials a single time, then make single-click payments from within the apps of participating merchants.

"Amazon's one-click checkout has been a competitive advantage for years," said Rick Oglesby, a senior analyst and consultant at Double Diamond Payments Research. "Online shoppers can switch merchants in seconds, so if it becomes cumbersome to complete a purchase consumers will shift their shopping to another site where it's more convenient."

The integration will bring the function of Venmo Touch, a single-touch payment system developed after Braintree acquired Venmo in August 2013, to the vast network of PayPal merchants and consumers. PayPal's parent company eBay bought Braintree in December 2013.

Venmo's technology supports person-to-person payments and mobile commerce, and is especially popular among college students, eBay CEO John Donahoe said in April. EBay has long planned to use Venmo's technology to "get PayPal out to where the action is" by blending the two systems together.

The new One Touch system is in beta testing with some merchant developers and will be made available to all merchants using the Braintree v.zero SDK (software development kit) and all PayPal app users in the coming weeks, said Bill Ready, Braintree's CEO, in an Aug. 19 blog post on Braintree's site. Braintree's recently launched v.zero SDK added PayPal support alongside Braintree's existing payment processing tools.

"While we were considering becoming part of PayPal, one of the drivers was the opportunity to make this kind of frictionless buying available for hundreds of millions of consumers and many millions of merchants and developers," Ready said. "This will become increasingly important as consumers look to mobile devices as their primary computing devices and are demanding a more seamless buying experience."

Bringing Venmo Touch's technology to PayPal will benefit PayPal's broader strategy to increase its appeal to developers, Oglesby said.

The expansion of mobile commerce and the future adoption of wearable computing to make payments are pressuring merchant acquirers to enable easy navigation, he added. "Will you really enter your name, address and card info into your watch?"

PayPal acknowledges that payment remains a pain point for phones and tablets. Half of e-commerce shopping sessions occur on mobile devices, but consumers complete their purchases at a rate of two-thirds less than they do for desktop shopping if the checkout experience isn't mobile-optimized, said Anuj Nayar, PayPal's senior director of global initiatives, in an email sent through a spokesman.

In the blog post, Ready acknowledged the traditional "tradeoff" between convenience and security in payments, and said mobile provides an opportunity to "rethink" that premise. "After all, which one knows more about the validity of a user—the high-powered mobile computing device that [users] carry in their pocket or the magnetic stripe on the back of the cards in their wallet?"

Braintree did not reveal details about how it handles security, but Ready appeared to reference using mobile devices to vet transactions. "Mobile phones allow us to detect unusual activity in real-time and confirm with the user, before they've left that transaction," he said.