Moosejaw Not Part of a Strategy to Do POS Payments, PayPal Says

While some observers have been predicting for some time that alternative-payment processors that handle transactions for online merchants will soon extend their services to the physical point of sale, Moosejaw Mountaineering's decision to start accepting PayPal at cash registers in its seven stores does not represent a conscious plan to recruit brick-and-mortar retailers, the San Jose-based processor says. “It's a great example of a PayPal merchant using our platform in a way that makes sense for their business, but this is not a strategy we're pursuing proactively moving forward,” a PayPal spokesperson tells Digital Transactions News. Madison Heights, Mich.-based Moosejaw, which sells camping and other outdoor gear, began accepting PayPal at its stores last week. After the cashier totals the sale, the customer may use his mobile phone to access his PayPal account via the processor's 2-year-old PayPal Mobile service. He can then complete the transaction via text message or by accessing PayPal via the mobile Web and using the retailer's e-mail address, which the cashier supplies. Moosejaw told Internet Retailer magazine's news service that the merchant has adopted the payment method to appeal to its largely youthful customer base, many of whom are accustomed to using PayPal for online transactions. Moosejaw is planning to deploy signs around its checkout counters to announce the availability of PayPal and is promoting the option by offering double the rewards points it gives in its loyalty program on non-PayPal sales, the merchant told Internet Retailer. Moosejaw may also have been drawn to the idea of accepting PayPal in its stores by the potential for chopping its transaction fees, says Nick Holland, a senior analyst at Aite Group LLC, a Boston-based researcher. The merchant could have “seen the light in terms of real savings that can be made using alternative-payment networks compared to the de facto card networks,” says Holland in an e-mail message to Digital Transactions News. Pricing on the PayPal transactions to Moosejaw was not available. But Jeffrey Wolfe, chief operating officer for the retailer, says acceptance costs were not a primary consideration. “It's not as much about the lower rates with PayPal as it is about the customer experience,” he says in an e-mail message to Digital Transactions News. “It's cool to pay with PayPal and it's even cooler to do it in a retail store with your cell phone.” He adds it's too early to gauge results. “We're very confident our customers will love having the option,” he says. Moosejaw does not currently accept PayPal on its Web site, where it accepts the bank cards, American Express, Discover, and its gift cards, though Wolfe says integration for PayPal is “in the works” and the option will be available on the site “soon.” Standard PayPal pricing for online payments runs from 1.9% plus 30 cents per transaction up to 2.9% plus 30 cents, depending on volume. At the lowest rate, a $100 transaction thus costs a merchant $2.20, which could compare favorably to what many merchants pay for Visa and MasterCard transactions. Moosejaw's decision to accept PayPal at the point of sale may not have stemmed from a current plan at PayPal to recruit brick-and-mortar merchants, but other merchants could follow suit. “I think [PayPal is] quite clearly looking to extend presence to the physical POS,” says Holland. A key question mark will be customer usage. Holland says the current method of connecting PayPal to the cash register?using PayPal Mobile?is “a little clunky, but given the lack of alternative architecture for PayPal to have presence at the checkout, it works.” He cautions that any such alternative will have to compete with older forms of payment, particularly cash, on the criteria of speed and convenience. One alternative-payments network with an acknowledged plan to extend its online service to the physical point of sale is Bill Me Later Inc., which last fall said it was ready to start working with two to three unnamed merchants to offer its credit-based processing service in stores (Digital Transactions News, Oct. 8, 2007). In a addition, a mobile-payments startup called Mocapay provides a service that allows customers to use their cell phones to make point-of-sale payments at about 200 merchants in the Denver and Cincinnati areas (Digital Transactions News, Jan. 10).