Cheap, no contract reader is more about growing its ecosystem
Paypal Here
Online US payments services firm, Paypal, is to launch its own chip and pin service in Britain this summer, allowing users to connect wirelessly to its free app for Android and Apple smartphones. Trials of the new service called PayPal Here have already started in London and will be aimed at small businesses and mobile traders who can’t afford the chip and pin machines offered by high street banks.
Its service will compete with similar ones offered by iZettle and Payleven, all of which are based on a per-transaction, contract-free payment model rather than fixed fees and terms.
Chip-and-pin payment is seen as key to the success of mobile payments platforms in the UK, where smartphone or dongle-based services have failed to gain traction.
In the USA, mobile payments start-up Square is reckoned to be processing $8 billion in payments annually and is now valued at $3.25 billion as a company.
But its phone-based model has yet to be successfully transfered to Britain, where the system of payment cards with a chip and pin remains dominant and other systems, such as those using NFC chips for contactless payment, are niche.
Paypal has yet to divulge the cost of its device, though it says transaction fees will be similar to those on its website, with retailers able to apply for and order its reader through the app.
Stockholm-based iZettle, which launched in 2011, charges merchants £49 for its chip-and-pin card readers and a 2.75 per cent transaction fee thereafter.
But where iZettle’s service is aimed more at tradesmen on the move, it’s expected PapPal will be pitching its service at established merchants where it already has a small base of users.
According to PayPal, 89 per cent of UK adults carry at least one payment card, while 66 per cent of payments received by small businesses are still in the form of cheques or cash.
It’s thought that PayPal’s gambit, meanwhile, is not about making money from selling its device but instead growing its PayPal and eBay ecosystem.
Even so, it says, its device meets all stringent security standards having been approved by EMV (Europay, MasterCard and Visa) while complying with all industry benchmarks for payment card data.
