PayPal to take aim at Square with mobile card reader – Rumour

Triangle-shaped plug-in reader

PayPal is reportedly set to mount a direct challenge to mobile payments services such as Square with plans to launch its own mobile card-reading device. A GigaOm article, citing people are familiar with PayPal’s plans, claims that the eBay-owned online and mobile payments company is to unveil the triangle-shaped plug-in reader at an event this week. The reader will reportedly form part of PayPal’s attempts to gain a significant presence in physical stores, which has seen the firm agree a deal to integrate its software into Home Depot’s point-of-sale service across 2,000 US stores. A mobile payments reader will enable PayPal to target smaller businesses that may not have the infrastructure in place to run PayPal software in its stores. PayPal is refusing to comment on the reports, saying only that it will unveil “what we believe will be the future of commerce for small businesses” at the event.

Any move to replicate Square’s recent success could prove a shrewd one for PayPal if executed successfully. The adoption of Square’s hardware, which can be plugged into merchants’ iPhones and iPads, has grown steadily over the past year, and the firm recently announced that it is now processing USD4bn in payments per year. PayPal has enjoyed its own success in the online payments space, generating USD1.2bn in revenue during its latest quarter from 106m global users, and the firm is currently propping up parent company eBay’s earnings.  

PayPal had made significant strides to bridge the gap between online and offline payments in recent months, while gaining traction in mobile payments. The firm’s trial in Home Depot stores enables consumers to pay for goods using a pre-paid PayPal card, or by entering their mobile number or a PIN at in-store checkout terminals. PayPal labelled the trial as “the beginning of a fundamental change in the company”, and a card reader would allow consumers that don’t own a smartphone or haven’t downloaded PayPal’s app to purchase goods, with PayPal snaring a share of the revenue. However, PayPal’s lack of presence among physical merchants means that any mobile card reader could face a struggle usurping Square, which has quickly established itself as a payment alternative in the US.

If confirmed, the news is illustrative of the continuing competition in the mobile payments space, with firms jostling for position in the nascent market. A raft of mobile operators and banks are developing mobile apps to enable the purchase of goods using a mobile device, while some companies, such as Google, are launching mobile wallets based on near-field communication (NFC) technology. However, Square COO Keith Rabois has previously slammed NFC’s use in mobile payments, claiming it holds no value for consumers or businesses and is only useful for firms that want to track consumer behaviour.

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