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PayPal Here comes to stores near youMar 22, 2012 (Datamonitor via COMTEX) -- PayPal has announced the launch of a new service, PayPal Here, which allows small retailers to accept card payments by using a smartphone. This reaffirms the company's vision for the future: allowing people to make purchases anytime, anywhere, and over any device using PayPal. However, the cost of transactions will remain a barrier to encouraging small retailers to move away from cash. PayPal Here is a triangular card reader that attaches to a smartphone. Combined with the application, PayPal Here accepts card and PayPal payments, tracks cash transactions, and allows merchants to directly invoice customers. The device effectively turns a smartphone into a merchant terminal, allowing cards and PayPal transactions to be accepted wherever there is mobile data coverage. This is not the first of its kind in terms of payment solutions for small businesses, with Square, Verifone PAYware, and Intuit GoPayment offering similar services, predominantly in the US. In addition to the US, Verifone PAYware is also available in Canada and Israel, while Intuit GoPayment is available in Canada. Initially, PayPal Here will be available in the US, Canada, Australia, and Hong Kong. In March 2012 Verifone claimed that it had become the first among its competitors to process $10bn of annual transactions in mobile payments, more than double the $4bn that rival Square has cited so far. The value of mobile transactions puts into context the opportunity that PayPal Here is trying to explore, especially in new territory such as Australia and Hong Kong. In Australia, 84% of enterprises are micro businesses with less than four employees; half of these companies use smartphones to conduct business. While PayPal Here is focusing on the mobility of payments, cash is the prime target for future growth. In Australia alone nearly A$150bn of cash is withdrawn annually from ATMs, which is equivalent to 39% of the volume of point of sale card transactions. While the new tool addresses some of the infrastructure issues that are preventing small retailers from accepting card payments, there are two major barriers that any new payment tools need to overcome. Firstly, the cost of the transactions will continue to discourage both small business owners and consumers from adopting card payments, especially for low-value payments. PayPal Here charges merchants in Australia 2.4% plus A$0.30 for each credit card transaction, and 3.9% plus HK$2.35 per transaction in Hong Kong. Secondly, the cash economy remains a problem from many perspectives as some small businesses may deliberately use cash transactions to hide income, thereby avoiding paying tax on these transactions. The size of the global cash economy remains unknown but it is understood to play a relatively strong role in the small business sector in various countries. Value-added services will become the key proposition in convincing both small business operators and consumers to change their payment habits, as the two reasons outlined above will create friction in the uptake of new payment technology. http://www.datamonitor.com Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon |