Square Inc. started the mobile payment “revolution” in 2010 with their card reader, attracting over 100 million users to their San Francisco-based startup by December of that year. Intuit and VeriFone followed shortly with mobile-based credit card readers of their own, and the list kept growing for companies looking to invest in this payment solution.
The design and payment logistics of PayPal Here appear to be very similar to the business model of Square. The interest charge planned is only a slightly lower percentage than Square`s fixed rate of 2.75%. This may cause some consumer revolt, but not enough to get them to stop selling their goods in a down economy.
Here`s a look at some basic card readers on the market today:
Square Reader, launched in 2010, has a fixed 2.75% interest rate on all card purchases through the reader. The reader has a free app and costs $9.99 to purchase, which is refunded upon signup for the Square payment program.
ProPay JAK, launched 2010, app is free to download and the card reader costs $39.99, although its transaction rate of 1.99% is a leader in the mobile payments industry.
PayPal Here, launching 2012, will be free to download and free for all Ebay/PayPal users, and charge 2.70% transaction fees, not completely favorable but offers an alternative to those tired online-only PayPal receipts.
EBayandPayPal reported a 27% sales increase in 2011, to $11.7 billion total revenue. Juniper Research projects that with this mobile device technology, PayPal may top $170 billion in transaction volume by 2015, up from $60 billion in 2011. Ironically, the reasoning behind the initial development of the PayPal service, which launched in 1998, was a way for people to accept credit for goods and services WITHOUT using credit cards.
PayPal Will Adapt To Ever-changing Future
Since the development of Square and other mobile-based credit card technologies, PayPal`s popularity has taken a dive, with consumers growing increasingly tired of paying fees for their transactions (instead of just meeting up in person to exchange cash), and becoming desperate for other options to accept payment for online transactions. Those wanting to get rid of annoying “PayPal fees” on their transactions will not find much relief in PayPal Here (although the 2.7% fee using the device is lower than the 2.9% you would have to pay if you used your PayPal account).
The next step in PayPal`s plan is to form partnerships with merchants that will allow them to take PayPal payments in their physical stores, using the assistance of the card reader.
In a recent interview touching upon PayPal Here, eBay CEO (and current PayPal President) John Donahoe described the eBay/PayPal approach to “see where the world is going and create products to fit that.” In the late 1990s, eBay and PayPal MADE the way the world was going. The eBay/PayPal joint service revolutionized the way people sell and receive payment for their goods. In 2012, it appears the longtime stalwarts of the ecommerce industry are only trying attempting to reinvent themselves with the changing times.
A Bloomberg News reader named Carl M. claims that in Canada such technologies are already in use, such as restaurants that bring Square-styled card readers to the table for instant payment. If food retailers adopt this technology in masse, it could become a more consumer-safe alternative to traditional dining, in which you are handing over your card to a complete stranger.