advertisement
advertisement

PayPal Offers Free Card Processing, But For Who?

Written by Frank Hayes
May 15th, 2013

PayPal (NASDAQ:EBAY) is offering free credit, debit, check and PayPal processing for qualifying merchants until the end of 2013. The catch: The retailer has to trade in a cash register for a PayPal-compatible point-of-sale system, according to a blog post by PayPal president David Marcus on Tuesday (May 14).

The promotion will go live in June, although applications are being accepted now, Marcus wrote. He didn’t give any other details of the deal, such as how much trade-in value a retailer will get in order to buy a PayPal-equipped POS from Erply, Leapset, Leaf, NCR Silver, ShopKeep or Vend, or exactly what “free” means when it comes to processing costs.

But The Wall Street Journal reported that to qualify for the promotion, merchants currently must be primarily using an old-fashioned system such as a cash register, and PayPal may send out employees to collect the register and verify the system upgrade. Marcus also told the Journal that there will also be limits on the size of the retailer that qualifies—the promotion is aimed at small merchants—and how much PayPal will pay for the upgrade.

That nebulous set of restrictions may hurt PayPal in this promotion, since it apparently excludes any retailer that has already advanced as far as 1990s-era POS technology.

Also on Tuesday, micro-POS vendor Square announced a new version of its card-swipe device, this one housed as a stylish stand for an iPad that can be used to replace a conventional POS terminal. The $299 Square Stand only works with older iPads (a version for the newest iPad with its Lightning connector will come later this year).

Square said many of its early adopters will be coffee, pastry or sandwich shops. But in a sign of how much work Square has ahead of it in its effort to go upscale, while the Square Stand announcement was made at a coffee shop, it wasn’t a Starbucks (NASDAQ:SBUX), and the coffee chain—Square’s largest retail partner—hasn’t indicated it will use the new POS device.

Posted in In-Store, IT Strategy/Industry, Mobile/Wireless/Contactless, Payment Systems, Security/Fraud
advertisement

2 Comments | Read PayPal Offers Free Card Processing, But For Who?

  1. Gavin Phillips Says:
    May 18th, 2013 at 10:39 am

    Regardless of how appropriate Square and PayPal’s ‘register’ apps are for a small business, Starbucks aren’t going to replace their existing enterprise POS system with apps that have 1% of the functionality, control and reporting that they need to run their business. Likewise, I’m not going to replace my BMW with a free skateboard, just because both technically enable me to get from A to B.

  2. Christine Speedy Says:
    May 20th, 2013 at 7:54 pm

    Thank you Gavin for my laugh of the day- well said!

Newsletters

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!
advertisement

Most Recent Comments

"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." -Marc

Will Warranty Enforcement Be Amazon Marketplace's Achilles' Heel?

Nathan
I buy most of my nerd toys on Amazon and I had never stopped to consider that I may be shooting myself in the foot in terms of warranties. I'll have to make a point of checking the seller's info to confirm they are authorized distributors (at least for high-ticket items). Thanks for the head's up! Read more...

When Replacing NFC, Tech Is Really Not The Issue

A reader
Folk wisdom on the net suggests that if you are given a "free" product, look carefully at the terms because you are no longer the consumer - you are the product. If Google offered free readers to merchants, what would they be getting from those merchants? Data. They would be able to close the loop on when and why customers who research on line buy from a bricks and mortar store. This would enable Google to know retailer price points, which searches are most effective to get those products in front of on line advertisers, and to be able to sell that advice to others. Not every retailer would want to provide such data to their competition. Read more...

Court To Fed: Keep The (Inter)Change

terry
This was an easy way for merchants to effectively directly remove money from a customer’s bank account. The risk of default was low, as was the cost of processing. Merchants had to install new PIN-based POS terminals, but many banks and acquirers helped to subsidize these costs by setting the interchange fees at “par” (no fee) or even reverse fees as a subsidy. Read more...

Walmart Sales Tax Snafu: How Did They Get This So Wrong?

Paula
I've been in the industry for a thousand years and didn't know about these "collection fees". Actually checked with my former boss, a COO of a major multichannel retailer, and neither he nor his CFO knew about it either, even though his company is taking advantage of it in a couple of states. Read more...

PCI's Not-So-Open Global Forum

Marc
I agree with your premise that the PCI SSC needs to do a better job of communicating with POs. I don't agree with your QSAs interpretation of PA-DSS requirements. 4.2.7 is not specific to user accounts with user databases. "4.2 Payment application must provide an audit trail to reconstruct the following events: 4.2.7 Creation and deletion of system-level objects within or by the application." The standard interpretation, in my experience, is that the application must provide an audit trail for system events. Read more...
Stephen Ames, CISA, CISSP
I received confirmation from the PCI Council's director of data security standards that my PA-QSA was not exacly spot on with his guidance. Without getting into too much detail, my application in question is compliant with PA-DSS 4.2 out-of-the-box. I'll be having a conversation with my PA-QSA about this. Read more...

Why Did Gonzales Hackers Like European Cards So Much Better?

David True
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...
Marc
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...
Biff Matthews
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...
Mimi Hart
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...
A reader
@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...

Changing Terms of Service? Be Ready For A Class Action Lawsuit

Bernard Regier
Very enlightening article. In regards to policy statements/terms of service, why hasn't Craigslist been sued up the wahoo for not allowing users to cancel their memberships? Of their many uncouth business practices, including complete lack of accountability and doling out strange, arbitrary punishments to out-of-line members(see customerservicescoreboard.com for 8-9 hundred horror stories), disallowing individuals to terminate service seems the most unlawful. I don't know anything about contractual law or online regulations, but If I owned a store, I could refuse or restrict service to anyone or lock them out if necessary; what I CAN'T do is lock them in!Your thoughts? Read more...
StorefrontBacktalk
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.