PayPal’s Small Business Solution Under the Microscope
It seems that a new mobile payment solution is hitting the market each week.
For instance, I recently mentioned that PayPal was laying the groundwork for its own point-of-sale platform for larger retailers.
If you recall, PayPal didn’t go with the increasingly popular near-field communication (NFC) technology for this solution. Instead, users enter a phone number and PIN code at the register that corresponds to their PayPal account.
Now the company is taking steps to expand its digital wallet’s reach to small businesses, too. A market that’s already dominated by companies like Square, VeriFone (NYSE: PAY) and Intuit (Nasdaq: INTU).
Let’s take a look at the technology’s features to see how it measures up…
PayPal “Here” Brings Old and New Features to the Table
The new platform, currently only available for the iPhone (though Android integration is on the way), is dubbed PayPal Here.
Once an order is entered into the app, the merchant selects how the customer plans to pay. If it’s credit, then the seller swipes the card using the secure attachment. Then the device goes to the consumer, who then selects how he wants to receive the electronic receipt (by email, mobile, or none).
As with its competition, PayPal Here allows consumers to pay with all major credit cards. But it also gives users the option to pay by check. PayPal Here merchants can accept credit card payments without the attachment, too. Through a partnership with Card.io, sellers can process a payment just by scanning a credit card with the phone’s camera.
PayPal’s offering a competitive fee, as well. It’s only charging merchants 2.7% of each transaction, which is lower than any of the major competitors out there now.
So retailers are given a fairly solid incentive to choose PayPal’s offering over the competition.
But consumers also benefit from other aspects of the platform.
Beefed Up Security to Give You Peace of Mind
I’ve mentioned before how PayPal’s mobile payments platform for larger retailers isn’t exactly the most secure solution.
That’s because anyone could simply look over your shoulder, watch you enter your phone number and PIN code, then use that information to make purchases at another participating retailer.
Luckily, while PayPal Here allows users to pay using the digital wallet feature, it doesn’t involve your phone number and PIN code.
Instead, consumers first need to check-in with a participating merchant. Then, during the time of the transaction, the retailer selects PayPal at checkout. This pulls up a list of current PayPal users who have already checked in at the store. Which is similar to Square’s Card Case feature.
Better yet, this list also has a picture of each user to help the cashier identify the customer. Thus adding another layer of security to the process.
So ironically, using your digital wallet funds with PayPal Here is actually more secure than accessing them at a major retailer.
In the end, PayPal’s new payment system is certainly a worthy competitor to the current leaders in the space.
But with Square and VeriFone already racking up $4 billion and $10 billion per year, respectively, it has a long way to go to catch up.
Good investing,
Justin Fritz
Related Topics: Stocks, Tech and Innovation
Square (in which Visa bought an interest in 2011) 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 enough to cause this product to be literally “dead on arrival”? Donahoe can’t mandate the use of this clunky prodict. To me it sounds like another desperate 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, some comments on PayPal “The New Way To Pay In-Store”, PayPal Digital Wallet, PayPal Debit MasterCard, PayPal Here, PayPal Local and Watch With EBay …
http://forums.auctionbytes.com/vbulletin/showthread.php?t=24611
eBay / PayPal / Donahoe: Dead Men Walking
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