PayPal, a huge name in accepting online payments, is jumping into the world of local small businesses accepting credit cards with PayPal Here. It’s a new service, not fully rolled out yet (as of March 2012).
|The PayPal Here triangle reader is sure
to remind you of the Square reader.
It strikes me as quite similar to Square, but with some very important differences. Square has been very popular with rural small businesses including farm stands and all sorts of fair and festival exhibitors. I accept credit cards with Square at my liquor store now.
Like Square’s simple (and square) card reader that plugs into the audio jack of a smartphone or tablet, PayPal Here uses a simple (but triangular) card reader that plugs into the audio jack of a smartphone or tablet.
Businesses can snap a pic of a credit card to complete the transaction if the card reader isn’t available or the card won’t scan. It can accept checks the same way: snap a pic to deposit the check. In comparison, Square lets users key in a credit card number if a card won’t scan, but it won’t accept checks. On both services, the business pays a higher rate on “manual” credit card transactions (when it is captured by photo or by typing the number in).
Customers can pay without cash or cards using their PayPal account and the PayPal app on their smartphone. This is similar to the Square CardCase app, though PayPal has a much larger user base to possibly convert over to mobile payments.
Payments are deposited to the business’s PayPal account. The business can use a PayPal debit card to access funds immediately at ATMs. A bank account transfer is supposed to take about 3 days. Square deposits funds into the business’s bank account, usually the next day. I’m a little leery of having funds going straight to PayPal. For the volume of business our store does, going to an ATM or waiting 3 days would not be a good solution, but for smaller volume sellers, it could work.
The rate for credit card transactions is 2.70% currently, putting it slightly below Square’s 2.75% rate. Both services are mercifully free of monthly fees and other similar charges common with traditional credit card processing. Checks are accepted without a fee.
The iPhone and Android apps are said to be rolling out soon, and the card reader triangles are apparently on a wait list. I checked the Google Play Store (which used to be called the Android Market), but didn’t see it yet.
Bottom line: This is more bad news for traditional credit card processing and more good news for small businesses.
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“This is more bad news for traditional credit card processing and more good news for small businesses.”
Sorry, where is this bad news for traditional credit card processing? Even as a very small business I only paid 1.9% discount fee via my bank-issued merchant account. These “mobile” products are of use only to very, very, very small businesses.
And, just for a laugh, some serious analyses of PayPal’s “The New Way To Pay In-Store”, PayPal Here, PayPal Digital Wallet, PayPal Debit MasterCard, PayPal Local and Watch With eBay …
eBay / PayPal / Donahoe: Dead Men Walking
Becky McCray says
Philip, I think more alternatives like Square, PayPal Here, Intuit GoPayment and Dwolla are very good news small businesses, and this is very bad news for traditional credit card processing because small businesses now have more options.
I read the anti-PayPal story you linked to. Clearly, many online auction businesses have good reason not to like PayPal. I understand that, and think you might like to look into one of the other choices: perhaps Square or Intuit GoPayment would be a better fit.
I own several businesses myself. My liquor store, a fairly significant business, used a traditional merchant account for many years. We paid a qualified rate of 1.55%, (equivalent to your 1.9% discount fee), but that isn’t the important number. With all associated costs tacked on, the actual effective rate was over 3%. Your bank will never tell you that rate. You’ll have to figure it yourself. We’ve converted to Square.
If you have evaluated the new choices, figured your effective rate (with all fees, taxes, charges, additions, etc.), and you find that a traditional account is still the best choice for your business, then stick with it.
If you want, you can read more about my experiences with my store: Converting to Square for credit card processing.