PayPal Eager to Get Into Point-of-Sale Transactions

PayPal is well-know to anyone who has ever bought anything on eBay or at other online vendors, but now the company is eager to take on other merchant processor services. It denies having designs on this vast market, but industry observers are skeptical. But you be the judge.

You may have noticed that Moosejaw Mountaineering, an outdoor retailer, started offering PayPal as a payment option earlier this year. Customers pay using their handsets and a PayPal mobile account.

PayPal is also trying to convert some vendors on eBay into using PayPal to process credit card payments. These aggressive pitches have forced BankCard Central to cut its rates in order to keep a few of its customers who were about to walk out and into PayPal's fold.

Rumors abound of bonuses being offered by PP to merchants as an incentive to switch, but no one is saying if any vendors have actually accepted any of these bonuses.

However one large online shoe retailer, Grapevinehill.com, which does $13 million in annual sales, now offers PayPal as a payment option. Check the bottom right corner of their website home page here - http://www.grapevinehill.com/.

PP's move into retail sales should not be a surprise. They rolled out a service three years ago called Website Payments Pro; designed for smaller vendors on eBay and elsewhere, it allowed them to accept major credit cards when they would not have qualified for such services elsewhere.

But soon after PP rolled out Website Payments Pro, it also acquired VeriSign's transaction gateway. Pro also has the advantage to vendors of blending all card fees together into one low rate. This means that American Express, which usually charges vendors more for handling their card, is no more expensive for them to accept. Vendors with the largest volumes get the lowest fees charged by PayPal.

Imagine that you are a high-end, upscale retailer who gets a lot of AmEx credit card payments. Would you resist switching to a processor who saves you a significant chunk of profit on sales every month? While PP is not currently pursuing these upscale vendors, it will not turn them away.

SOURCE: Digital Transactions, July 2008

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