Shell’s pact with PayPal will make it Britain’s first gasoline retailer to offer mobile payments. The agreement underscores how a range of establishments are offering mobile payments as consumers grow more comfortable using mobile devices.

“This is an astute move by both Shell and PayPal,” said Jordan McKee, senior analyst for mobile marketing and commerce strategies with Yankee Group, Boston. “For mobile payments to gain traction they must be implemented in high frequency verticals such as grocery, transit and fuel.

“By working with Shell, PayPal greatly increases its chances of making mobile payments more habitual thanks to convenience of avoiding checkout queues paired with the frequency of purchasing fuel,” he said.

New level
The service will offer a new level of convenience to customers, from busy parents who want the ease of remaining by their vehicle with their children, to those in a rush who want to fuel up and pay as quickly as possible.

Consumers will be able to use the service through either the Shell motorist app or the PayPal app.

Increasing convenience at the pumps.

After driving into the station, the customer selects the corresponding pump on the app.

The app then authenticates the transaction. The customer can then fill up and go.

When refueling is complete, a receipt is automatically sent through to the phone, letting the consumer drive away, knowing the transaction was a success.

The move will give customers the flexibility and convenience of paying without having to leave their car. Those who want to go in the station’s store and buy other items will still be able to.

PayPal’s partnership with Shell takes the payments site further down the road to the day a consumer can leave a wallet at home and pay by phone.

Shell serves around 25 million customers daily at its 45,000 globally branded sites. PayPal is a global leader of mobile payments and processed $46 billion in mobile payments last year. It has 19 million active accounts in Britain and over 162 million globally.

Gasoline retailers so far have used mobile mainly to drive loyalty programs.

In October, Citgo Petroleum Corporation drove application downloads with a new “Win With Citgo” promotion, which offered 108 fans a chance to win significant prizes during the holiday season.

Consumers in Massachusetts could partake in the campaign at any Citgo location. To participate, guests had to scan the QR code on designated point-of-purchase products, download the Win With Citgo mobile application and enter to win the appointed prizes.

Two months earlier, convenience and gas retailer Mapco launched a mobile commerce and loyalty application in which PayPal was the exclusive payment option.

The retailer also integrated its My Rewards loyalty program into the app, and bolstered the discount it offered customers who paid with the app.

Busy times
For Shell, quicker checkout translates to increased throughput during busy times.

Two in three consumers view convenience as a critical feature in a mobile payment application.

Providing customers with consistent incentives.

“Shell has an opportunity to tightly couple the payment experience enabled by PayPal with loyalty and offers inside its own mobile application,” Mr. McKee said. “The end goal here should be to deliver relevant rewards and coupons inside the application with the intent of encouraging the user to enter the convenience store and purchase goods that inevitably provide exponentially higher margins than fuel.

“Consistent incentives can help to steer drivers away from competing gas stations and drive loyalty for Shell,” he said.

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York