* McDonald's tests mobile app featuring PayPal in France
* PayPal mobile service demonstrated at McDonald's
* Square's deal with Starbucks creates 'urgency' for
By Alistair Barr
SAN FRANCISCO, Aug 17 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.
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,
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
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.
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.
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. [ID:
But landing a partner the size of McDonald's, with over
30,000 restaurants, would be a big win, according to analysts.
"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."
Square's deal with Starbucks "creates a sense of urgency for
PayPal," he added. "This is a race."
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.
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.
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.
"If they can shave 10 seconds off wait times, same-store
sales could go up a lot," he added. "It's substantial."