Of Special Interest


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16th September 2011

PayPal details POS retail push

PayPal has revealed its Point of Sale strategy to try and carve out a slice of the future market. The advantages PayPal believe their strategy has includes:

- 1 Allowing retailers to accept PayPal without any new terminal cost. The mobile phone number is used where a card number might be expected. This can be input manually or using a PayPal issued card. A pin is used for validation.

- 2 PayPal utilise its current merchant network through the offering to customers of discount vouchers and directed adverts to customers. The vouchers and adverts are electronic and stored on the phone. A search for a product either by name or code is possible across the merchant base within the customers neighbourhood.

- 3 PayPal stress there is no wait for NFC phones to be manufactured and adopted. All services can be used with any moderately advanced phone immediately.

- 4 The widespread holding of PayPal accounts means the merchant can immediately attract a larger prospect base than a scheme tied only to certain cardholders or banks.

- 5 Combined with PayPal P2P, including by 'bumping phones', this can be used for transfer between friends or paying allowances to teenagers who may not have a bank or card account.

-6 No actual bank or card account is exposed in the transaction making it safer from a fraud point of view.

PayPal's initial success was by marketing to a sector that established financial organisations did not seek to attract. It will be a harder job to take on the major card companies on their own turf. However PayPal is entering using some of the advantages from its existing extensive network. Retailers, with the promise of not needing any capital investment may be interested in having another player that has a large customer base in existence. From the retailer's point of view much will depend on the one thing not yet revealed - the total cost to the retailer per transaction.