The service that is called “PayPal Here” launches in the United States, Canada, Australia and Hong Kong on Thursday, as Reuters reports.
PayPal Here is a triangle-shaped dongle that attaches to the smartphone through the microphone jack and reads credit cards, says Wired.
According to International Business Times, PayPal’s new service comes in direct collision with Square, a similar payment method established in 2010 by Twitter co-founder Jack Dorsey.
“This product is better,” said EBay CEO John Donahoe. “It has the most complete set of features and functions of all available products on the market.”
Moreover, said Donahoe, “this product will be backed by PayPal, which means it will go global fast, and will have access to over 100 million customers.”
If to compare the two services it is obvious that PayPal Here has a bunch more features, tells Tech Land.
PayPal charges a slightly lower transaction fee — a flat 2.7% vs. Square’s 2.75% — and plays up its debit card, with a 1% cashback feature that reduces the effective fee to 1.7%.
What is more, if you don’t have your reader, you can snap a photo of a card to accept it. It tracks cash and check payments as well as cards, and also has a feature for issuing invoices.
With the new payment method, PayPal mobile vice president David Marcus, who unveiled the fresh cutting-edge service on Thursday in San Francisco, said in a press briefing that “no business will ever have to say they can’t accept a form of payment.”
“We are going to aggressively push this out to our 100 million PayPal users around the world … We can accept any form of payment, short of barter,” Marcus said.
John Donahoe called PayPal Here the fusion of traditional retail functions with that of technology
“The intersection of technology and traditional retail is having a bigger impact on shopping than at any point in history,” Mr Donahoe told reporters.
Answering to the conserns of privacy PayPal said that customer card information will be encrypted by the triangular card reader before transactions are sent to the PayPal app on the mobile device. Such a measure will prevent customer data from being lost or stolen from merchants’ smartphones.
Square’s original reader was notoriously unencrypted, but the company started shipping an encrypted version last month.
Square’s app is now available on the iPhone and Android smartphones, as well as the Square Register app for iPads.
PayPal’s app only works for the iPhone, but the company says its Android app is coming soon.
PayPal is a leading online payment processor. Now company is trying to expand into the physical world.
Square leads this niche of the mobile payments market with some 750,000 sellers under its wings and has so far processed $2 billion worth of yearly transactions.
PayPal has a good chance of grabbing some of the millions of small merchants who still do not accept credit and debit cards.
“It’s a big market and it’s growing very rapidly,” Rick Oglesby of Aite Group said.
“Most providers think there are 17 to 20 million small businesses in the U.S. that are not accepting cards.”