PayPal Launches Smartphone Card Reader System

PayPal has announced a new thumb sized credit reader that will allow users to make payments at small businesses.

With the launch of ‘PayPal Here’ the eBay-owned payment service jumps into the increasingly competitive mobile payments market and will remove the need for retailers to have a complex cash register system.

Increasing competition

 The reader plugs into a smartphone’s audio jack and is controlled by an app, which is currently only available on iPhone, but an Android app is in the works and is expected to debut next week. PayPal takes a 2.7 percent cut for each credit card swiped, slightly cheaper than competitor Square’s rate of 2.75 percent.

The system will be shipped to a few thousand merchants in the country as well as retailers in Hong Kong, Canada and Australia, with Europe receiving it in the near future. The application can also use the smartphone camera to process cheque payments, although this feature will be initially limited to the US.

PayPal says that it hopes to make the traditional payment experience “disappear” and that its brand recognition and level of entrenchment will give it an advantage over its rivals, as will the fact that it accepts all major credit and debit cards.

“PayPal Here is just the latest addition to our comprehensive suite of payment solutions for small businesses – from PCI-compliant checkout options and invoicing, to debit cards and mobile-optimized checkout,” said David Marcus, vice president of PayPal, mobile in a blog post. “With PayPal Here, we are now able to serve as a one-stop shop for online, offline and multi-channel small businesses.”

PayPal has long anticipated a boom in mobile payments, but has been a critic of Near Field Communication (NFC) technology, which it says may be out of date by the time it reaches the market. This is despite claims that the technology appears to be gaining momentum ahead of mainstream adoption.

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