PayPal Accounts Can Now be Linked to Android Pay

In what could prove to be a significant change in the way we make remote and online payments, PayPal accounts can now be linked to Android Pay, meaning that PayPal users can now make payments at physical retail outlets from smartphones, tablets and other mobile devices.

The new agreement between PayPal and Google means that if you have a device using the Android OS, PayPal is now one of the funding options you can choose when you use your smartphone to buy goods and services at selected stores. This builds on an existing relationship between the two online giants, which began three years ago when PayPal became an accepted payment method in the Google Play store.

This marks the latest development in PayPal’s growth strategy, which has been focused on increasing its reach into more traditional marketplaces where cash and credit cards have previously dominated (although it remains the case that PayPal accounts can’t be linked to Apple Pay or Samsung Pay, two of the main digital wallet rivals to Android Pay).

Implications for Africa

It is expected that this new partnership and payment method will have significant take up in Africa, for a number of different reasons.

Firstly, Africa contains some of the world’s most underbanked nations (with notable exceptions being South Africa and Nigeria). For hundreds of millions of people, conventional banking facilities that are used as a matter of course elsewhere in the world simply aren’t an option — credit cards and bank accounts, for instance, are not necessarily available or accepted everywhere in Africa. This has led to the enthusiastic take-up and use of pre-paid and virtual cards and other non-traditional payment methods.

There has also been staggeringly fast and widespread growth in the use of mobile phones across Africa. Spanning all age groups and genders, the use of this technology to make and process payments for goods and services and other financial transactions has grown to the extent that research suggests more than 30% of mobile phone owners have transferred money or made online payments from a hand-held device.

It is also estimated that the number of mobile phone users in Africa will reach 725 million by 2020, and that the average monthly use of mobile data will increase to 4.3GB. This is because in regions where there is poor or limited infrastructure to facilitate stable or efficient broadband internet connections in homes and business premises, millions of people use mobile devices as their primary or only means of getting online

When you consider the lack of access to traditional banking facilities that many Africans have to endure, combined with the ever-growing use of mobile devices to access the internet and to complete financial transactions, it is easy to see why the ability to use PayPal on an Android device is an exciting development that could have far-reaching implications for how business is done across Africa.

The Potential for PayPal

PayPal’s potential growth in Africa on the back of this deal is enormous. Africans have shown themselves to be extremely enthusiastic about taking advantage of mobile technology and non-traditional banking methods to get access to markets and services from which they have previously been excluded, and so it is expected that being able to use PayPal accounts to make purchases in retail outlets will also be widely embraced.

With the potential for even more Africans’ mobile phones to become their wallets as well, the opportunities for PayPal to be a leading player in a small business boom are enormous. Many business owners and entrepreneurs in Africa don’t have premises from which they can operate on a permanent or ongoing basis, and therefore lack the infrastructure and technology to accept payment methods like credit and debit cards. However, PayPal accounts can be operated entirely from a mobile device, and so even the smallest or transient businesses now has an additional option for accepting and processing payments.

Likewise, setting up a PayPal account only requires an email address, and there are no credit checks, which means anyone with a smartphone can establish an account and then make purchases via PayPal. For many Africans without access to banking facilities, such a service is invaluable.

However, it will also be interesting to see whether PayPal uses this opportunity to cash in on the rapidly growing appetite in Africa for mobile and online gaming. As an example PayPal removed its services from online casinos worldwide in 2003, yet this gradually began to change when online gaming sites were made legal in a small number of US states in 2013, and slowly but surely their services have begun to reappear.

The move back into the industry has not, however, been wholehearted. PayPal will not partner with just any brand — only with those whom it calls “approved merchants”. This is not an issue in Britain, where online casinos have to be licensed and approved by the UK Gambling Commission, with PayPal being widely accepted at UK gaming sites, but in many other countries, it is still not an option as a payment method.

This is because there are a great many ‘gray’ markets, where the legal status of both operating and playing at online casinos is less clear. In Australia and New Zealand, for instance, it is illegal to operate an online casino from within their borders, but people living in these countries are free to play at sites operated offshore. This is also the case in most African countries.

PayPal has to date shown itself very reluctant to have a presence in these sorts of markets, unlike other e-wallet operators such as Skrill, Netller and EcoPayz, who offer their services to casino and gaming operators in both regulated and ‘gray’ spaces.

But in the case of Africa, where there is a growing demand for online games alongside booming mobile phone ownership and use, it will be very interesting to see the position that PayPal takes towards facilitating online casino payments, and whether this new partnership with Android Pay will see them broaden their policy and approach in this area.