PayPal goes toe-to-toe with Square as it launches mobile card reader

The mobile card payment race

PayPal is launching a mobile card reader, dubbed PayPal Here, as it attempts to attract small- and medium-sized businesses to its payment service in a move that could pose a significant threat to Square. PayPal’s triangular plug-in reader is accompanied by the firm’s software app, compatible with Apple’s iOS and Google’s Android OS, which enables merchants to process transactions, track them, and also accept cheques by taking a picture using a smartphone.



Merchants that join the initiative will receive a PayPal debit card, with funds from transactions available almost immediately, although cheques will take up to six days to process. Both the card reader and app are free to merchants, like Square’s, but PayPal’s 2.7% transaction fee undercuts the 2.75% that Square takes, as PayPal attempts to muscle in on its success.

"Consumers are changing how they shop and pay. Retailers are looking for a technology company they can trust and eBay is that company," says eBay CEO Kevin Donahoe.

PayPal has made significant strides in recent months to bridge the gap between online and offline payments, with moves to integrate its software at major retailers’ point-of-sale terminals. This is evidenced by its trial with Home Depot, as well as initiatives such as NFC-based cards and confirming purchases with a pin or phone number on their mobile device. 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.

The company’s move to target smaller retailers appears more aggressive, with the firm rolling out its plug-in readers and software this month, though this may have something to do with Square’s progress during the past year. Square is already establishing a strong base and recently announced that it is processing USD4bn in tractions annually. However, PayPal’s 106m global users make it an automatic threat to Square’s continuing success.

Jacob de Geer, CEO of payments firm iZettle, told StrategyEye earlier this month that PayPal's mobile reader, would be good for the mobile payments market. "Competition is healthy and helps to increase consumer understanding about mobile payments and pushes the industry to progress quicker,” he says. Though PayPal Here will be available in Canada, Hong Kong and Australia, de Geer says a move into Europe could prove more difficult. “The chip-card market is a different kettle of fish with different security standards and regulation to comply with."

How to Monetize Ideas

Posted on July 10, 2011 by Alan Weiss

 

Very few good ideas are ever monetized. They either drown amongst a lot of other, mostly bad, ideas, or they emerge not fully metamorphosed - crystalline, fragile constructions that blow apart in a light breeze.

Here’s how to can turn a good idea into very good money (or at least know that it’s not such a good idea):

• Assess the size of the audience. Do you have sufficient mass so that even 1 percent of the total constitute significant business? The “World” is never your audience. Who really might have pragmatic applicability for your product?

• Assess the quality of your reach. Do you have a highly popular web site, lists of people who know you and trust you (or, better, who have purchased before), a blog, a newsletter, speaking appearance, alliance partners and so on so that your product can be projected?

• Assess the medium. Are you considering a form and format that is ideal for learning and use? Does the medium add or detract from your value? (Example: “Talking heads” on video rarely constitute popular products.)

• Assess your brand. Are you sufficiently well known that many people will purchase merely on the strength of your name and renown? (Too many unknown people think the easy way to money is with a product. Even good products languish when people don’t trust you and/or have never heard of you.)

• Assess your price point. People believe they get what the pay for. Are you maximizing your price based on perceived value? It’s as much work to make a £10,000 sale as a £1,000 sale, so why not make the former? The key is profit, not numbers of sales.

• Assess whether this is long-term business potential. I believe that any new venture should reach six figures in a maximum of two years. Selling £25,000 the first year probably means much less than that in profit in terms of amortizing development and other costs, and the second year will probably bring even less.

• Assess your ego and motives. Are you doing this because others have done it, or because you want a “book” or a “CD” or just passive income, or are you really providing value to others in varying ways that extends their effectiveness?

• Assess the market. Is this fresh and new, or derivative? Do you really have new intellectual property, or is this the “Seventeen Habits of Teams Pursing Black Swans that Moved Cheese for the Soul”?

© Alan Weiss 2011. All rights reserved.