Ebay’s PayPal To Expand with New Merchant Device for Small Businesses

Ebay’s PayPal To Expand with New Merchant Device for Small Businesses
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On Thursday, eBay Inc (NASDAQ:EBAY) PayPal’s announced plans to extend its services to merchants with a new card-swiping device. Targeted to small businesses and cab drivers, it will accept all four major credit cards and scan checks.

Ebay Inc (NASDAQ:EBAY) made the announcement at an event in San Francisco. It explained that the device will plug into a smartphone and accept American Express, Discover Financial Services, MasterCard Inc. and Visa Inc. payments. Retailers will also be able to receive postponed payments through invoices, and subsequently code account information so credit card data doesn’t remain on cell phones, reported Bloomberg.

PayPal collaborated with the design firm, Fuseproject, to create the device. The firm is known for their Jawbone Bluetooth headsets and One Laptop per Child computer projects.

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By implementing the product, PayPal will expand its footprint into the brick-and-mortar arena as business owners can utilize its technology. Named PayPal Here, interested businesses will receive from the company a free “thumb-sized” card reader and smartphone application.

For EBay, they will profit from a 2.7 percent charge on transactions. This sets them up in direct competition with a product from Twitter, Square Inc. This device also welcomes the four major credit cards but charges a 2.75 percent rate.

But there’s even more competition. Intuit Inc. and VeriFone Systems Inc. also have readers that allow consumers to pay via credit cards on their cell phones.

PayPal’s roots come from accepting payments from small e-commerce sites without utilizing credit cards. With the new reader, the company will become a competitor in the mobile payments markets, which could see more than $170 billion of transactions by 2015, up from 2011’s $60 billion last year, noted Juniper Research.

Retail Expansion

In addition to appealing to brick and mortar businesses and cabbies, PayPal is also looking to expand to retailers. According to Bloomberg, the company has been speaking with the top 200 U.S. retailers since last year. Back in December, PayPal’s former president Scott Thompson said that the company had convinced a “significant” number of those stores to ink contracts for using PayPal at the stores.

PayPal has become the fastest-growing division for EBay Inc (NASDAQ:EBAY) and it has helped the company see a revival. In 2011, its sales rose 27 percent  to $11.7 billion; however at the payments sector, it revenue growth dropped to 28 percent from the previous quarter’s 32 percent.

In a recent interview by Sam Shrauger, PayPal’s vice president of product and experience in the division, he said the unit is trying to increase sales through numerous channels besides mobile phones.

Shrauger added, “Everybody is thinking that everyone is going to pay for everything with their mobile phone. We don’t actually believe that that has to be the case. We think consumers are going to decide how they want to pay. And what’s important is that they have a wallet — a digital wallet.”

On Thursday’s news, EBay is down 2.1 percent to $36.83.

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