PayPal today sued Google for allegedly stealing trade secrets to build its new e-wallet platform, asserting its position in the increasingly competitive world of mobile payment systems.
Bedier, according to the suit, was quietly interviewing with Google while simultaneously negotiating for PayPal to handle the sales end of Google's coming e-wallet.
The suit also claims that Tilenius, also a former PayPal employee, broke a non-disclosure agreement with her former employer in recruiting Bedier.
Bedier has been vice president of Google payments since 2011, while Tilenius became vice president of Google commerce in 2010. Both worked at PayPal and its parent company eBay for nine years before leaving to join the Mountain View, Calif.-based company.
But according to PayPal's lawsuit, Bedier turned coat and "is now leading Google's efforts to bring point of sale technologies and services to retailers on its behalf."
This alleged betrayal matters deeply to PayPal since it has been working with major retailers in San Jose, Calif., to develop a new kind of credit card reader. PayPal says it has also been in talks with Google for three years to become the company's main payment option for app purchases through Android mobile phones. For Google to steal its ideas and market them first would mean years of wasted effort for PayPal.
The suit comes on the heels of Google unveiling its "Wallet" service at a conference in New York. Both Bedier and Tilenius demonstrated the e-wallet's capabilities, which include allowing customers to simply tap their devices against a payment reader without ever reaching for a credit card. Google Wallet will debut in New York and San Francisco at retailers like Macy's and Subway to start with before adding others soon.
Hosing down Google's e-wallet parade with a lawsuit shows just how badly PayPal wants to remain on top in the competitive e-payment market. Six billion customers still use PayPal each day, as more and more people eschew brick and mortar buildings in favor of online banking and financial transactions.
Mobile payment volume on PayPal Mobile should more than double by year's end to cross $2 billion, showing tremendous growth at a time when consumers are just beginning to migrate to mobile payments in general.
But more and more banks, credit card companies and software giants are hurrying to roll out their own mobile payment ventures as the market heats up on all sides.
PayPal faces competition not only from Google Wallet, but also from Visa and Mastercard's joint venture with AT&T, Verizon and T-Mobile. Their Isis project is set to hit the market soon, prompting PayPal to innovate or risk being squeezed out by competition from major credit card companies.
Square, too, could pinch PayPal with its increasingly popular free credit card readerthat fits into iPhone head jacks. Square charges merchants 2.7 percent per transaction, challenging PayPal's 2.9 percent fee per purchase.
For PayPal, wanting to remain top dog in a rapidly expanding market, a lawsuit against Google is a natural step in securing its position and staving off what could be a major competitor. But the crowd of competitors is only getting larger, with every player eager to get in on an expected $1.13 trillion market by 2014.
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