Visa executive slams PayPal in-store service

By Andrew R. Johnson

A Visa Inc. executive criticized PayPal's mobile-payment system Wednesday, suggesting a service the online payment provider is testing at some Home Depot Inc. stores could open customers up to fraud.

The comments underscore the high stakes traditional credit-card companies are placing on digital payments, a market also being targeted by the likes of technology giants Google Inc., PayPal parent eBay Inc.  and Verizon Wireless. Visa is testing its own "digital wallet" service that could be used to make purchases online and on mobile devices.

"I think there's real issues around security," Jim McCarthy, global head of product at Visa, said Wednesday of PayPal's new service at a Goldman Sachs conference in San Francisco. McCarthy suggested someone could gain access to a customer's personal information when using PayPal to make a purchase in a physical retailer.

PayPal began testing a service in January that allows its customers to make purchases with their PayPal accounts in stores instead of swiping a card or handing over cash. The customer can facilitate a transaction by typing in their mobile phone number and a personal-identification number into the merchant's terminal. The service is currently available in 51 Home Depot stores, and PayPal expects to expand it to 2,000 Home Depot stores next month, according to Anuj Nayar, a spokesman for PayPal.

Nayar didn't immediately have a comment on Visa's statements Wednesday night. A spokesman for Home Depot referred inquiries to PayPal.

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