Digital Transactions Authoritative, insightful and timely information for payments professionals
PayPal Inc., a dominant processor of e-commerce transactions, has made no secret lately of its ambitions to move into the world of brick-and-mortar commerce. The only missing element was a physical token that account holders could use at the point of sale. Now it appears that void will soon be filled. PayPal on Wednesday officially unveiled the PayPal Card, a mag-striped plastic card that will become available to its base of 100 million active users some time in the first half of 2012.
The unembossed card, which account holders will have to apply for, will carry the PayPal logo on its face, but will bear no other identifying information—no name, no account number. Transactions on the card will be protected by a PIN. PayPal will also introduce at the same time a companion payment product it calls “Empty Hands,” a system that will let account holders pay the point of sale by entering a phone number and a PIN.
The card is intended to let users access the funding sources they have stored in their accounts, or digital wallets. These can include credit and debit cards, but also loyalty points, prepaid and gift cards, and demand-deposit accounts. Working with a PayPal app, both the card and Empty Hands will include smart-phone-based geo-location and rewards functions. Users will receive notice of nearby merchants along with discounts or coupons they can store in their wallets and have applied automatically when they shop at those stores. Users will also be able to give merchants access to their shopping lists, and receive offers linked to items on those lists.
PayPal plans to test the card in a pilot that will start this year, Sam Shrauger, vice president of global product and design for the processor, tells Digital Transactions News. Some 20 merchants are expected to begin accepting it during the second quarter of 2012, he adds. PayPal’s merchant-sales team, which currently markets the company’s e-commerce service, will sell the card in an integrated effort aimed at large merchants with both online and physical stores, Shrauger says. “We view it as selling payment solutions,” he says. Both the card and Empty Hands will work on most existing POS devices with integrated PIN pads, he says, with a software overlay to support the products.
Acceptance pricing for the card, which will be up against stiff competition from the likes of Visa Inc., MasterCard Inc., American Express Co., and Discover Financial, has not been disclosed. “We’ll have a transaction-based pricing model, largely an extension of what we do now,” Shrauger says, adding PayPal will likely post acceptance pricing for the card on its site once it has hammered out final rates. The company has long posted its e-commerce rates. He also hints that the pricing will be competitive compared to competing brands, pointing to the product’s ability to extend offers and build loyalty. “Merchants want value for their interchange,” he notes.
Both the card and Empty Hands were revealed at a developer’s conference in San Francisco organized by eBay Inc., PayPal’s parent company.
