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PayPal's Beacon can make customers more loyal than ever

Tina Orem

July 16, 2014


That's what a bar full of people shouted at least once an episode on the 1980s TV show “Cheers,” which was about the adventures of a bar owner named Sam and his friends. One of those friends — Norm — came to the bar so frequently that everyone knew his name, and Sam would start pouring Norm's favorite beer the minute he walked in.

Norm was a loyal customer. In fact, he often joked that he spent more time at Sam's bar than with his wife, Vera. And his tab with Sam let him breeze in and out of the bar, making snarky comments along the way.

It's nice to be Norm, but if you're a businessperson, you know it would also be great to be Sam. You could recognize your customers the moment they walk in, greet them by name, serve them quickly, and let them pay easily. They would be drop-dead loyal, just like Norm.

That's the beauty of PayPal's new Beacon product — a tiny Bluetooth Low Energy device that plugs into a power outlet in your store. The device connects to customers' PayPal Beacon apps, which they download onto their smartphones. If you're using Erply, Leaf, Leapset, Micros, NCR, Shopkeep, or Vend point-of-sale systems, PayPal says, PayPal Beacon will integrate easily, making it easier to do the books.Click to email me

When the customer enters your store, Beacon senses the presence of the customer's PayPal-connected smartphone and triggers a vibration or sound that confirms that the customer has checked in. The customer's photo then appears on your point-of-sale screen, which allows your employees to greet the customer by name. The connection also allows you to tailor your marketing programs by sending customers a quick message on their phones about a sale or a promotion. The app works for any smartphone.

Though the connection allows the store to know who the customer is, the primary goal is to allow customers to pay for items with their PayPal accounts and to do so simply by saying they're paying with PayPal. The transaction is automatically completed — there's no need to exchange cash, swipe credit cards, or sign for anything. They just get in and get out. The receipt comes in an email. It's faster than swiping a card or even tapping a phone to use a mobile wallet.

PayPal has over 100 million users, but its Beacon product still has competition: Apple iBeacon and Qualcomm's Gimbal Beacon are two of the biggest. Square also has a Pay with Square payment system.

PayPal isn't disclosing the fees for PayPal Beacon yet.

Many coffee shops already train baristas to learn customers' names and favorite drinks, but imagine that you operate a pharmacy and can pull John Doe's refill as soon as he walks in the door. Or if you run a restaurant, you could greet your customers by name and put them on the list for a table right away. Payment could be speedier too. Instead of ringing up customers, they could just tap a few things on their phones and the payment process is complete. Of course, if you lose your smartphone and have it set to automatically remember your PayPal password, losing your phone could end up costing you a bundle.

There are plenty of questions to answer as the world waits for Beacon to go mainstream. In particular is the worry about the potential damage caused by hacking into a user's PayPal account, which could mean unauthorized purchases. And of course, there are questions about how much users want to be tracked (although PayPal says users can turn Beacon on and off so they have more control over where they “check in.”)

Though the notion of being “recognized” at a store may be a little disconcerting for some customers, there's little question that beacon systems could speed up their checkout process. But, assuming PayPal Beacon is cost-effective, it could also be a way to get smarter about your customers. By knowing who they are the minute they come through the door, and by using that head start to give your customers a better experience — one that keeps them coming back — beacons could soon have you shouting “Norm!” too.