Products like Square and early mobile wallet innovations are already nipping at the heels of the traditional payment-processing infrastructure that merchants use every time you swipe a card to buy something at a store.
But online auction powerhouse eBay, owner of PayPal, thinks there’s room for one more competitor to bank-issued debit and credit cards with a logo such as Visa or MasterCard on the front: The company plans to roll out PayPal in brick-and-mortar retailers.
“This all started happening over the last couple of years,” says PayPal spokesman Anuj Nayar. He says new mobile technologies make it possible for companies like PayPal to provide alternatives to traditional payment methods.
PayPal is already installed in 51 Home Depot stores, and the hardware chain plans to introduce PayPal in all stores by next month, Nayar says. And Reuters reports that Office Depot is next, though Nayar won’t confirm it. PayPal has plans to implement payment systems at 20 big retail chains by the end of the year.
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If you’re a PayPal fan and you’re intrigued, here’s how this new process would work: The payment terminal at the cash register would include a separate “PayPal” button along with the usual options like debit and credit. A customer choosing PayPal would enter a mobile phone number and a PIN for verification. The shopper gets a paper receipt and PayPal generates a digital receipt that goes in their PayPal account.
Nayar says that for consumers who don’t have or don’t want to use a mobile phone number, PayPal will issue them an access card with a magnetic strip (like a debit or credit card) that will contain their account information. Instead of keying in a mobile phone number, customers would swipe the card, then enter their PIN.
EBay’s annual report said merchants will pay a fee to PayPal that’s similar to what they would pay a card-issuing bank and network processor. But Reuters quotes a PayPal executive saying the company will subsidize the merchant costs on point-of-sale transactions in an effort to bring retailers online and grab market share.
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Nayar says merchants would also benefit from PayPal’s vast repository of consumer data that could help the stores target advertising to customers. Data about users’ locations, products searches and previous purchases, for instance, could help stores target promotions and other marketing to consumers. All of this will be opt-in for the consumer, Nayar adds, so PayPal users don’t have to worry about the company sending details about their shopping habits to offline merchants.