A Forrester Research report analyzes the early successes and failures of Apple’s mobile payments system.
Its PayPal Here service works with multiple payment types.
PayPal, a unit of online marketplace eBay Inc., is making another move to become a form of payment consumers use in the physical world as well as online. Its new PayPal Here service enables merchants to accept credit and debit cards, PayPal, and checks using a PayPal app on their iPhones.
Similar to competing products from Square Inc., VeriFone Systems Inc. and Intuit Inc., PayPal Here enables merchants to accept payments using their smartphones and a small, triangular card reader that plugs into the headphone jack.
In addition to the traditional swipe of a credit or debit card through the PayPal Here card reader, the service also enables merchants to accept checks by using the phone’s camera to get an image of the check and electronically accept it as payment. Merchants also can track cash transactions via the PayPal Here app.
Of course, PayPal Here accepts PayPal transactions, too. Currently, PayPal has approximately 106 million active accounts, it says.
PayPal also updated its PayPal Mobile app for consumers to enable them to find local businesses that use PayPal Here by tapping the Local button in the app. When ready to pay at a business, the consumer slides a map pin across the screen onto the location of the business to indicate she wants to use her PayPal account for that transaction. The merchant is notified in his PayPal Here app with a message that includes the consumer’s name and image associated with her PayPal account.
Merchants pay 2.7% for a swiped transaction and 3.5% and a 50-cent fee for any transaction in which they key in card data, says Ed Eger, PayPal senior vice president and general manager of North America, core payments and emerging markets. There is no contract or monthly fees, unlike traditional merchant acceptance services.
PayPal Here is the company’s latest step outside of its well-known e-commerce role, and one that further symbolizes the blurring of the lines between e-commerce and in-store transactions, Eger says. “It’s all commerce now,” Eger says. “The small merchants are struggling to keep up with that. This gives them the capability to change their game and compete in the new world.”
Earlier this year, The Home Depot Inc., No. 53, in the Internet Retailer Mobile Commerce Top 300, began testing in-store acceptance of PayPal and announced in February it would move to take PayPal at nearly all of its 2,000 stores.
PayPal Here likely will perform well for the company, says Rick Oglesby, senior analyst at consulting firm Aite Group LLC. “Their customer base probably overlaps already,” Oglesby says. The strategy of simple fees and no contract is a good one for smaller merchants, he adds. “When it’s a very small merchant, he’s not willing to spend a lot to accept cards.”
Currently, PayPal Here only is available for the iPhone, but an Android version is in development, PayPal says. PayPal Here is in a test phase in the United States, Canada, Australia and Hong Kong. Broader availability is expected in the next month in these nations.
Separately, PayPal also previewed changes to its digital wallet, enabling consumers to create lists of items they’d like to buy. The PayPal digital wallet then will search for coupons and deals for products on these lists and automatically place them in the consumer’s PayPal account.
The new wallet, which consumers will see beginning in late May, also enables the consumer to delay payment for an item. PayPal will offer a five- to seven-day grace period on eligible in-store purchases. This enables consumers to change the funding source, pay over time in installments, if available, and apply different funding sources to the purchase. Additional details were not available about how this would work.