PayOne files patent suit against Home Depot over use of PayPal POS tech

06 March 2013 | 5815 views | 3 Shopping mall

Mobile money vendor PayOne has filed a patent infringement lawsuit against Home Depot over the retail giant's use of PayPal's in-store checkout technology.

Early last year, Home Depot became the first big US retailer to back PayPal's new in-store payment system, embarking on a nationwide roll-out of the technology after a successful pilot.

Shoppers at more than 2000 stores can either swipe a PayPal-issued card to pay for purchases, or enter a mobile phone number and PIN into the point-of-sale terminal.

It is the latter option which has prompted PayOne to file a suit against Home Depot in the Northern District of California, arguing that the deployment infringes on multiple patents.

The patents include "the use of a mobile phone number and a PIN (personal identification number) to complete the checkout process and payment at point of sale," says a statement.

The complaint seeks unspecified damages and a court-ordered injunction against future infringement by Home Depot.

Although Home Depot was first on board with the disputed PayPal technology, a total of 23 large retailers - including Barnes & Noble, Foot Locker and Toys "R" Us - were using it by this January.

PayPal sees the phone number and PIN option as a better mobile bet than NFC, which the company has long dismissed despite the efforts of the likes of Visa, MasterCard, Isis and Google.

Joe Lynam, CEO, PayOne, agrees: "The 'mobile wallet wars' have moved beyond the digital world into point of sale, but now face adoption challenges and substantial friction with consumer setup requirements, security concerns and lack of merchant required NFC infrastructure."

Comments: (3)

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Stanley Epstein - Citadel Advantage Ltd - Modiin | 06 March, 2013, 14:55

Unless the banking industry (and that includes PayPal as they hold customers deposits) and retailers can agree on a single standard for the next generation of payments, whether at the point of sale or remotely, all the current activity surrounding mobile wallets, mobile payments and the like are doomed to failure. Suing for patent infringements is simply driving another nail into the coffin.

After watching this developing morass my money is firmly on that old stalwart – the plastic card!

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Michael Kyritsis - ACI - London | 08 March, 2013, 13:12

Why sue Home Depot and not PayPal? Isn't it PayPal's POS technology which PayOne claims to have the patent on?

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 08 March, 2013, 18:43

@StanleyE: +1. According to this research report on retail payments released by RSR Research a couple of days ago, retailers are thoroughly frustrated with the multiple directions in which the present stakeholders are pulling mobile payments and have reacted by not making any budgetary allocations for any new form of payments as of now. So, plastic is going to be around for a while!

@MichaelK: If, indeed, PayPal has infringed PayOne's patent, it's likely to have known long ago that it was doing so, and would have likely already prepared a defence in anticipation of a potential lawsuit by PayOne in future. On the other hand, this infringement might come as a total shock to Home Depot. Besides, Home Depot is a FORTUNE 500 company with lot more "rep to protect" as against PayPal which is used to listening to irate merchants on a daily basis without getting bothered in the least bit. As a result, it would seem logical that PayOne chose to go after Home Depot rather than PayPal. And, why not, since patent owners are legally permitted to sue the buyer, not just the infringer.

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