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a boom in mobile payments, but has been a critic of Near Field Communication (NFC) technology, which it says may be out of date by the time it reaches the market.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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Steve McCaskill

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

View Comments

  • Square (in which Visa has bought an interest) has absolutely nothing to worry about, sans its effectively mandated use on the eBay marketplace, the clunky PreyPal could not hit the side of an old timber barn, let alone a modern B&M one.

    “Anuj [Nayer], who is PayPal's Global Director of Communications, said payments processed through PayPal Here would be protected the same as any other PayPal payment method - which explains why the Terms of Sale for Here includes a mention of rolling reserves. Yes, merchants who use the new card reader will be subject to the regular PayPal reserves and holds (rare occurrences for sellers in most categories, said Anuj), and PayPal is extending buyer protection to shoppers who transact with PayPal Here merchants.”

    http://blog.ecommercebytes.com/cgi-bin/blog/blog.pl?/comments/2012/3/1331862035.html/1/0#1331873673

    Well, many merchants already know what PayPal “protection” is like; many merchants already know what PayPal “rolling reserves” and “holds” are about; and many merchants already know what PayPal “buyer protection” is about—it has a hard wired bias towards the buyer: effectively there is no transaction mediation process as any reasonable person would understand it. And PayPal’s Nayer gives a different meaning to the word “rare” to what the rest of us understand it to mean … And for all this, PreyPal’s fee is only 0.05% cheaper than Square’s? Are they serious?

    Am I missing something here or is this initial launch information not sufficient to cause this product to be literally “dead on arrival”? To me it sounds like another Donahoe foray with Alice down the rabbit hole.

    Next time you drop into Home Depot, ask the check-out chick if anyone has yet used (the wholly eBay-funded roll out of) PreyPal to make a point-of-sale purchase. PreyPal at B&M Point-of-Sale is little more than an eBay Dept of Spin-created illusion and is undoubtedly a total waste of eBay shareholders’ funds. PayPal Here will likewise be another eBay lead balloon …

    And, just for a laugh, a comment on “The New Way To Pay In-Store” via eBay's clunky faux "bank" PreyPal, and some other matters.

    http://forums.auctionbytes.com/vbulletin/showthread.php?t=24611

    eBay / PayPal / Donahoe: Dead Men Walking

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