Barnes & To Accept PayPal

Written by Evan Schuman
August 16th, 2006

PayPal’s efforts to move beyond merely being the payment tool for Ebay got a big boost on Wednesday when Barnes & said it would accept PayPal. The move could also help Barnes & attract a younger demographic, which tends to be more comfortable with alternative payment methods and that sometimes have less easy access to traditional credit cards. That’s a good thing for retailers given the much lower payment fees associated with PayPal.

The news is not that big a deal for Barnes as retail partners of PayPal don’t typically see a huge revenue increase, but it certainly helps PayPal establish itself beyond Ebay, said Bruce Cundiff, a senior analyst for Javelin Strategy & Research and a former Jupiter Research analyst. PayPal is “certainly trying to focus on off-Ebay volume. I’ve heard that between 75 percent and 80 percent of PayPay revenue is still Ebay,” Cundiff said. “They’re really been trying to balance that out for a number of years.”


2 Comments | Read Barnes & To Accept PayPal

  1. James Gardner Says:

    One of the things that interests me most about this is that, if there are no new sales as a result of the Paypal integration, it means that any payment is volume straight out of the pockets of banks. Not a good thing if you’re a banker, since short of partnering with PayPal or Checkout, I don’t know what an appropriate competitive response would be.

  2. Evan Schuman Says:

    Absolutely. Clearly, one of the key retail factors behind this is unhappiness surrounding various credit card fees. From the banks’ perspective, if they start losing enough retailers to services such as PayPal, the competitive response would be pressuring MasterCard and Visa and others in that camp to cut fees.
    But like so many transition issues like this, there is a very high chance that any reductions will be too little, too late. In other words, by the time the marketshare increases by PayPal and other alternative services gets large enough that it pushes card issuers to take action, it may be too late to get that marketshare back. Once the retailers switch, it would have to be a huge reduction to get them to come back.
    The time for an “appropriate competitive response” is right now before PayPal and others have made a huge impact. If the issuers slashed prices right now before more retailers made the move, they could preserve much of what they still have.
    The other competitive response is already being made by the carriers: pushing technology and associated features that PayPal can’t yet match, such as contactless and elaborate points programs. Then again, PayPal’s stronger positioning today may enable them to partner for such services before too long.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.