PayPal is in the early stages of what may be a blockbuster mobile payments deal with McDonald’s Corp, the world’s biggest hamburger chain.<\/p>\n
McDonald’s is testing a mobile payments service featuring PayPal at 30 of its restaurants in France. Earlier this year, McDonald’s ran demonstrations of a broader PayPal mobile payments service at its franchisee conference in Orlando, Florida.<\/p>\n
A McDonald’s spokeswoman confirmed the France tests and said the PayPal demonstration at its conference was part of a booth that features “technology coming within the next 24 months or so.”<\/p>\n
PayPal is racing against start-up Square Inc and other technology companies to become the mobile payments service of choice as consumers increasingly use smart phones to make purchases in shops, restaurants and other retail locations.<\/p>\n
Square struck what could be its most important partnership to date last week when it teamed up with Starbucks Corp, the world’s largest coffee chain.<\/p>\n
PayPal, owned by eBay Inc, has signed up more than 15 retailers, including Home Depot and Office Depot, to accept PayPal payments in their stores.<\/p>\n
But landing a partner the size of McDonald’s, with over 30,000 restaurants, would be a big win, according to analysts.<\/p>\n
“McDonald’s would certainly be a whale,” said Gil Luria, an analyst at Wedbush Securities. “If McDonald’s customers can stand in line and order on a mobile app and pay with PayPal that is a huge extension of PayPal’s reach.”<\/p>\n
Square’s deal with Starbucks “creates a sense of urgency for PayPal,” he added. “This is a race.”<\/p>\n
The test in France lets McDonald’s customers order food on smart phones through a McDonald’s mobile application, or online, and pay with PayPal. There is a separate line in the test locations to pick up the meals, according to a PayPal spokesman.<\/p>\n
Demonstrations at the McDonald’s franchisee conference in Orlando featured a more “in-depth” service that would allow customers to order and pay using PayPal’s digital wallet and mobile application, the spokesman said.<\/p>\n
Rolling out a service like this may help McDonald’s cut lines at restaurants, which is a key factor in maintaining and growing same-store sales, Luria said.<\/p>\n
“If they can shave 10 seconds off wait times, same-store sales could go up a lot,” he added. “It’s substantial.”<\/p>\n
Related articles<\/strong><\/p>\n Mobile transactions to hit $730bn by 2017<\/strong><\/a><\/p>\n