Monkey Mobile

When it comes to mobile commerce, the winning formula is KISS (keep it simple, stupid). The more difficult it is to go from intent to discover to purchase, the more likely a consumer is to abandon their transaction. And with the cramped keyboards of today’s smartphones, no step is more churn-inducing than checkout, with its demands for credit card numbers and billing addresses.

Braintree knows this as well as anyone, having bet big on mobile long before any of its payments competitors. The gold standard for this frictionless mobile buying experience has long been Braintree-owned Venmo Touch, the mobile wallet and one touch commerce app that powers the frictionless payment experiences of Uber, AirBnB, HotelTonight, and TaskRabbit. Anyone who’s ever walked out of a traditional taxi without paying, thinking that the transaction was on Autopilot like Uber, knows that entering your payment details once and forgetting about it for the rest of time is the way of the future.

So when PayPal acquired Braintree last fall, the first question on many peoples’ minds was, when will PayPal get the Venmo treatment? The answer: Today.

Several weeks ago, Braintree launched its sexy new next generation SDK, Braintree v.zero, promising not only that it was the fastest and easiest way to access all of Braintree’s and PayPal’s payment features across the desktop, Web, mobile Web, and native mobile platforms, but also describing it as future-proof. Today, the company made the first of what if promises will be many near-term updates by adding One Touch to the PayPal mobile app.

Now, any mobile consumer with the PayPal app installed on their device will automatically see the option to swipe to checkout in any One Touch enabled app – without ever needing to re-enter their payment credentials. For a refresher, PayPal has more than 150 million global active users, a growing number of which have and use the company’s mobile app. Venmo Touch, while popular, has an audience a fraction that size. To say this is a game changer for merchants, would be a stark understatement.

The launch of One Touch PayPal does not mean Venmo is going away. For those users who prefer the more social experience –  transactions are posted to an in-platform newsfeed where users can comment and like this activity – Venmo will continue to live on beside PayPal, according toBraintree CEO Bill Ready. But you can start to see the lines blurring between the two worlds.

There’s no doubt that Braintree and PayPal are becoming less and less independent. When the two companies first got together, the big fear among developers and merchants was that PayPal would ruin everything that was great about Braintree – things like great customer service and modern end-user experiences. Rather than this be the case, the opposite is happening, one small product update at a time, as PayPal is becoming more Braintree-y, and is far better off as a result.

V.zero is the future of both Braintree and PayPal, according to Ready – who we have already predicted will one day fill the PayPal CEO vacancy left by David Marcus. The company remains staunchly committed to backward compatibility, so the legacy Braintree and PayPal SDKs will continue to function and receive support in perpetuity, but don’t expect much PayPal-specific development going forward. But, if you want access to cutting-edge payments tech like One Touch, Braintree v.zero is your only option.

“We prefer to use a carrot rather than a stick to entice people to switch,” Ready says. “There are still situations – for example there are currencies that PayPal supports that Braintree has yet to enable – where people will stay with their existing integrations. But we think, over time, the majority of people will choose to use v.zero.”

Another often-overlooked advantage of making the mobile device the center of a consumer’s payment experience is that it allows for stronger and less intrusive fraud prevention measures than possible otherwise.

For example, if a traditional credit card company is concerned about fraudulent activity, it must weigh freezing that card, and in the process weigh out the potential for delivering a bad user experience (in the case of a false-positive) versus the risk of being on the hook for any unauthorized spending. When card companies do freeze an account, the fix is to call in to customer service, likely wait on hold, and answer some security questions in order to reactivate the card – an all around miserable experience. WIth the bar so high, it’s no surprise that fraudulent activity is more common than it needs to be.

With OneTouch, the bar for interceding is much lower because PayPal (and Braintree) can message the user on-device and ask relevant security questions in real-time, introducing far less friction into a potential transaction.

The company also has the added security benefits of location data and mobile-device passwords which add another layer of security. As Ready asks in a company blog post today, “After all, which one knows more about the validity of a user — the high-powered mobile computing devices they carry in their pocket or the magnetic stripe on the back of the cards in their wallet?”

As a result, Braintree and Venmo have seen far lower fraud rates than industry averages, Ready says, although he declines to reveal exact figures. In this case, PayPal is benefitting from Venmo’s scale and experience as the company that now processed $1.5 billion of mobile payments per year (growing at 50 percent annually), more than any other company – a rare role reversal between the David and Goliath companies.

As Pando’s Sarah Lacy often explains, the only reason she is no longer an Honest.com subscriber is that the credit card she had on file expired and she was too busy (or lazy) to update it – and she loved the service. For Honest, that small bit of friction has meant the loss of thousands of dollars in revenue. With OneTouch now extended to the universe of PayPal mobile and Venmo users, that card would only need to be updated once and would then work seamlessly across all PayPal and Braintree merchants. With more than 100 million cards issued this year to combat fraud, this type of functionality is invaluable.

Similarly, with OneTouch (like the legacy PayPal product before it) merchants don’t need to worry about storying consumer payment credentials and the security risk that comes along with it. Ask Target how much that sort of peace of mind is worth.

“Our core promise since joining PayPal has been that the only way to deliver a frictionless buying experience is to connect as many consumers with as many merchants as possible across all devices and platforms on which they transact,” Ready says. “I think you’re starting to see now how that’s playing out in the new products we’ve introduced this year.”

Payments remains a hotly contested battle with PayPal competing with fellow innovators like Stripe, platform giants like Amazon, Google, and Apple, and legacy players like Authorize.net, First Data, Visa, MasterCard, and the banks. Scale has proven a huge advantage in this fight and it’s been the lone reason that PayPal survived as long as as it has without much innovation. But with Ready and the Braintree team now in the fold, things are looking up.

PayPal still has some image rehab to do and that pesky leadership issue to sort out. But the company has made major leaps in the last 18 months and seems to be continuing that momentum. Mobile is no longer the future of payments, it’s the now. And right now, with its scale, simplicity, and security, PayPal OneTouch appears to be the best it gets.