Is PayPal Access a bad idea for online retailers?

The PayPal brand has become synonymous with 'online payments', and despite the fact that the company isn't the newest kid on the block, it's no surprise that it keeps growing like a weed as  commerce continues to move online.

John Donahoe, the CEO of PayPal parent eBay, however, thinks that online payments should make up a much greater percentage of global payments than they currently do and as a result, PayPal is aggressively working to expand its footprint. One of the newest ways PayPal appears to be doing that is through a new offering called Access, which is reportedly set to be announced today at its X.commerce conference.

According to BusinessWeek, PayPal Access will "[let] people use their accounts in different Web stores without having to register at each one." The details:

"You can create an account wherever you’re shopping without giving the merchant your information," [a PayPal spokesman] said in an interview. By relying on PayPal developers to handle the innovation, Web retailers can make their sites easier and more functional without doing it themselves, he said. "These retailers don’t have the time and resources necessary to figure it all out."

As reported by Reuters, retailers using PayPal Access will only receive a customer's shipping address; PayPal will keep the rest of the customer's information to itself. The logic: by eliminating the need for customers to complete a registration and provide personal information to a retailer, the retailer may see improved conversions.

That sounds nice, but currently PayPal apparently doesn't have much support, if any, from retailers. And if the statements made by PayPal's spokesman are any indication, it's hard to see where such support will come from.

PayPal Access, as described, may on the surface offer some possible benefits to consumers, but it's hard to see how putting a barrier between consumers and retailers will really benefit either in the long run. After all, few things matter less to retailers today than data. In offering a 'solution' that aims to circumvent retailers' normal registration process, PayPal is really keeping valuable data about customers out of retailers' hands. That data, of course, tells them who their customers are. Needless to say, knowing who their customers are is absolutely crucial for retailers. This enables everything from more relevant email marketing campaigns to the creation of a better, more personalized user experience.

When coupled with the notion that developers should "handle the innovation" for retailers because "retailers don’t have the time and resources necessary to figure it all out", it becomes clear that PayPal's assumptions about online retailers may be slightly off. Put simply, many online retailers are far more sophisticated than PayPal is willing to give them credit for.

If PayPal is going to boost the number of transactions it handles, and compete more effectively with credit cards, it's going to need to do better than this. Savvy online retailers are always looking for ways to strengthen their relationships with their customers. It's hard to see how a PayPal barrier between retailers and customers will promote that.