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PayPal Inc. on Thursday announced that 15 more retailers had joined its point-of-sale initiative, which means the No. 1 alternative-payments provider is now more than three-quarters of the way toward meeting its stated goal of having 20 national retailers accepting PayPal at physical stores by the end of 2012.
PayPal also said POS terminal makers VeriFone Systems Inc. and Equinox Payments LLC, the U.S. operation of the former Hypercom Corp., would configure the software in their devices for PayPal acceptance. Those companies join Ingenico S.A., PayPal’s first POS terminal partner, which means PayPal now has the top three terminal makers in its camp.
Still more: PayPal says four specialty POS software providers serving 50,000 middle-market companies also would integrate PayPal acceptance capabilities into their applications. Those providers are Leapset Inc., ShopKeep.com Inc., Vend Ltd., and Erply.
PayPal President David Marcus and other company officials made the announcements at an event at PayPal’s San Jose, Calif., headquarters. The merchants will join The Home Depot Inc., the first retailer to accept PayPal in stores. Nearly 2,000 Home Depot locations now take PayPal, which customers can use by typing in a mobile-phone number and PIN at the terminal. Users can also swipe a PIN-secured, magnetic-stripe card PayPal is issuing for the program.
The 15 new merchants are: Abercrombie & Fitch, Advance Auto Parts, Aéropostale, American Eagle Outfitters, Barnes & Noble, Foot Locker, Guitar Center, Jamba Juice, JC Penney, Jos. A. Bank Clothiers, Nine West, Office Depot, Rooms To Go, Tiger Direct, and Toys “R” Us. Information about their total number of locations and when they will actually start accepting PayPal was not immediately available.
In a post on The PayPal Blog uploaded after the event, Marcus without mentioning his rivals by name took a swipe at mobile-payment systems such as Google Inc.’s Google Wallet and the Isis joint venture of three major mobile-phone carriers that will require retailers to get special terminals or upgrade existing hardware to handle near-field communication (NFC) transactions. PayPal’s POS program doesn’t rely on NFC technology.
“With PayPal, retailers don’t need to rip and replace, install NFC or conduct a massive upgrade to bring innovation to their customers,” Marcus said in the post. “PayPal works seamlessly with a retailer’s existing point-of-sale hardware. This simple integration allows consumers to pay quickly, easily and securely.”
Thursday’s announcements follow PayPal’s recent introduction of PayPal Here, a service for small merchants that use mobile devices for accepting cards. The service features a card-reading dongle that connects to smart phones and competes with the likes of Square Inc. and Intuit Inc.’s GoPayment.
“This demonstrates how thirsty the merchants are for alternatives to the existing payment schemes,” says former PayPal and Amazon.com Inc. executive René M. Pelegero, president and managing director of Woodinville, Wash.-based Retail Payments Global Consulting Group.
PayPal is not a truly separate payment network from entities such as Visa Inc. and MasterCard Inc. because many of its consumer users fund their PayPal accounts through general-purpose payment cards. Still, the POS initiative gives merchants another in-store payment alternative, an option they might find attractive for reaching PayPal’s 110 million active account holders worldwide, especially if pricing is competitive. “They [PayPal] should be able to certainly match or offer slightly lower” acceptance costs than merchants pay to accept bank cards, says Pelegero.
The deals with the terminal makers, meanwhile, could make it easy for PayPal to add to the 16 POS merchants now announced. According to Marcus, the three terminal makers give it potential access to 40 million devices worldwide. San Jose-based VeriFone, the biggest U.S. terminal maker, said its customer base includes 80% of the 200 largest domestic retailers, and Scottsdale, Ariz.-based Equinox said three of the top 10 retailers use its equipment.
VeriFone said its MX Solutions terminals, popular with large merchants, would be its first PayPal-accepting devices. At Equinox, the L5300 and L5200 terminals will be outfitted to take PayPal.
The four specialty software providers could enable PayPal to reach not only merchants with multiple locations, but also those with only a few locations but that use POS equipment not found in the typical card-accepting small business. Some of the providers’ merchants already are live with PayPal and use its feature that enables customers to notify a retailer that they’re coming to or are in the store, Marcus said.
