By the end of the year, users of Subway’s mobile app will be able to pay for their foot-long subs using something they’d typically associate with eBay: Pay Pal.
On Wednesday, Subway and the mobile payments company Paydiant announced plans to add Pay Pal functionality to Subway’s new mobile app. Customers will also be able to use PayPal when paying for an online order at order.subway.com.
Subway is the first joint customer of Paydiant and PayPal since the ecommerce payment company spent $280 million for Paydiant back in April. The deal gives PayPal a major restaurant chain, the world’s largest in terms of unit count, and bolsters Paypal’s efforts to emerge from ecommerce and into brick-and-mortar stores.
“This provides a lot of convenience to a lot of customers, and attracts new customers to come to Subway who are loyal PayPal users,” said Ken Moy, director, global payments and emerging commerce at the Milford, Conn.-based Subway. “At the end of the day, digital devices are changing lifestyles for consumers. Digital lifestyles are something consumers expect from their favorite brands.”
For Subway the deal has clear benefits. PayPal has 169 million users, and many of them might prefer the flexibility of paying for their sandwiches using PayPal instead of a traditional credit card over the company’s mobile app. Giving customers more payment options makes the app more functional, and expands the number of people who would be willing to use it.
“We’re bringing that customer base to bear,” said Chris Gardner, cofounder of Paydiant. “It’s exciting. It’s a potential way to get more customers, and to get customers to spend more.”
Subway’s 27,000 U.S. stores currently support its mobile app, which quietly debuted earlier this year. The app enables customers to choose a store, build their sandwich and pay for the order.
The app allows customers to skip the line, which can get long during lunch hours and other busier times. Paydiant helped Subway build and implement the mobile payment as well as the company’s loyalty program.
“It’s super convenient,” Moy said. “It’s a line buster. Subway is also known for its handcrafted, build-your-own sandwich experience. It was important for us to include that proposition.”
Moy said that Subway’s mobile app has had “incredible increases in usage” since it was launched in May, and the company will support the app with increased advertising and marketing. The app currently has mobile payment using credit card or the Subway card.
“We hope this will continue the app’s momentum, and that it’ll be a big part of how we do business going forward,” Moy said.
PayPal is one of the world’s largest payment processing companies. It was founded in 1998, went public in 2002 and was later acquired by the online auction site eBay. It was spun off again earlier this month.
Customers made 4 billion payments using PayPal last year, with a total volume of $235 billion.
PayPal has been working with other brick-and-mortar retailers like Home Depot and Foot Locker, for instance, and can be used as a payment at some restaurants through its partnerships with point-of-sale vendors. And last year, PayPal announced that it would be a payment option on Burger King’s mobile app. Starbucks customers, meanwhile, can reload their Starbucks cards using PayPal.
“This enables us to be where people are spending money every day,” said Chris Morse, director of communications with PayPal. “I went to Subway three days last week. It was quick, convenient and I paid with the app. I went to Home Depot and used PayPal. This enables us to be where more small businesses are.”
Contact Jonathan Maze at [email protected].
Follow him on Twitter at @jonathanmaze
