|Thu Mar 15 2012 21:40:35|
PayPal Card Reader Allows for In-Person Payment Processing
By: Ina Steiner
Some eBay sellers may find it ironic that PayPal is allowing sellers to process paper checks, a method that is "banned" on eBay. PayPal announced a new service on Thursday that lets merchants process credit cards and checks in person through a card reader and smartphones.
PayPal is calling the new PayPal Here service, "the future of commerce for small business" and is in part a reaction to a service from Square, founded by Twitter's co-founder, that lets merchants swipe credit cards in person. Square is popular among artists and crafters as well as non-retail service businesses, including lawyers, musicians, retail stores, vineyards and coffee shops. (See Greg Holden's article on Square from last week.)
Anuj Nayer said small businesses were PayPal's sweetspot when asked what types of businesses he expected to adopt PayPal Here. "Since the late 1990's we've been enabling small businesses to take payments, and the reality of what that means has changed" - first with online, then with mobile, and now with offline businesses.
Anuj, who is PayPal's Global Director of Communicaitons, 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.
PayPal Here's no-monthly fee and 2.7% transaction fees might seem attractive to merchants who currently use PayPal's virtual terminal for which they pay $30/month and 3.1% plus 30 cents per transaction, but PayPal Here fees are higher for card-not present or manual entry transactions - 3.5% plus 15 cents per keyed transaction.
Most merchants interested in using the card reader will have to wait until the service becomes widely available next month in the U.S., Canada, Australia and Hong Kong. PayPal Here will be offered on Apple iPhones and will later be available on Android devices.
Be sure to read the Terms of Service as for any new service. By signing up for PayPal Here, you are providing PayPal with authorization to obtain your personal and/or business credit report from a credit bureau, and you are required to obtain a customer signature on non-PIN credit or debit card transactions greater than twenty-five dollars ($25) - it is your responsibility to obtain your customer's consent prior to sending a receipt via email or SMS text.
Since PayPal Here allows sellers to process checks, a method that is prohibited on eBay for the most part, I asked eBay spokesperson Johnna Hoff if eBay would be rethinking the part of the Accepted Payments policy that says sellers can't ask buyers to mail checks or money orders (except for items in certain categories).
Johnna said, "Sellers would use PayPal Here for their offline businesses, if applicable - or potentially for local pick-up if they offered that as an option with a listing. But through eBay.com, PayPal would continue to be the likely payment choice. And, as you know, you can use virtually any form of payment with PayPal online - including checks. Your entire digital wallet can exist with PayPal - the buyer can use credit or debit card, check, bank account, etc. - the seller only knows they're receiving a payment through PayPal."
PayPal also released the latest version of its PayPal Mobile app for iPhone today, which lets customers use the App's "Local" feature to find nearby businesses that accept PayPal Here.