PayPal takes on Square with smartphone payments

Online financial transactions titan PayPal is letting merchants worldwide take payments using smartphones in an instantaneous challenge to startup Square.

The PayPal Here system uses a triangle-shaped "dongle" card reader that plugs into mobile devices to let people make purchases.

PayPal Here software also lets shopkeepers take payments by snapping an image of a card with a smartphone rather than having to swipe it inside the dongle.

"No business will ever need to say they cannot accept a sort of payment," PayPal mobile vp David Marcus said while unveiling the hot service at a press event at San Francisco's famed Ghirardelli Square.

"There's a lot greater than the triangle shape of this device," Marcus said.

The service from eBay-owned PayPal is a spin on one offered by startup Square, a brainchild of Twitter co-founder Jack Dorsey.

Square have been successful with independent entrepreneurs and small businesses starting from masseuses and taxi drivers to farmers and bicycle shops.

PayPal planned to capitalise on its dominant position as a world service for online purchases.

"We'll aggressively push this out to our 100 million PayPal users everywhere," Marcus said. "We will accept any kind of payment, wanting barter."

PayPal Here thumb-sized plug-ins and accompanying software for smartphones are free. Here was being rolled out for Apple's popular iPhones with a promise that a version for Android-powered smartphones will be available soon.

PayPal will charge merchants a flat fee amounting to two.7 per cent of every transaction.

The California-based company enticed merchants to funnel money from sales into PayPal business debit cards that give one-per cent cash-back rewards for purchases, ostensibly cutting transaction fees to one.7 per cent.

PayPal Here smartphone software for purchasers comes with social and shopping features including finding nearby participating merchants and automatically alerting shopkeepers to their presence in stores.

"We would like every PayPal user to feel like a VIP after they walk right into a coffee shop," Marcus said.

Payment card data scanned into Here devices is encrypted for defense.

Dorsey's Square was lauded as disruptive new technology because the application and accompanying dongle, the form of which gave the startup its name, was released inside the Us of a in 2010.

By the tip of last year, Square was utilized by 750,000 merchants and was handling US$2 billion in transactions annually, in step with chief operating officer Keith Rabois.

The San Francisco-based startup told AFP that it planned to expand outside the us this year.

Square charges a 2.75 per cent fee, on par or below merchants will be charged per transaction in the event that they went directly through mastercard companies, but has the good thing about no arrange costs.

Making it easy to start taking bank card payments have been a boon for small businesses, from sole operators based in homes to brick-and-mortar shops.

Square, and now PayPal Here, eliminate the necessity for classic commercial payment technology together with receipt printers and desktop mastercard machines.

"The intersection of technology and conventional retail is having a larger impact on shopping than at any point in history," eBay chief executive John Donahoe said on the Here unveiling.

"There'll be numerous change inside the coming weeks and months in how consumers shop and pay."

- AFP