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PayPal tuned up the trumpets today and made the big announcement: Its new card-swipe reader, Here, is here. And Square is squarely in its sights.
We'll see what kind of bravado Square summons up in response to today's shot across its bow. But despite a market presence that's taken root nicely and about $4 billion in processed receipts to date, the start-up has to be just a teensy bit concerned about being squashed by its gigantic new competitor.
PayPal and parent company eBay have neither hemmed nor hawed about their intentions vis-à-vis Square. For starters, the companies unveiled Here this morning in San Francisco, having sallied forth some 50 miles up the California coast from PayPal's San Jose headquarters to hold a press conference in Square's front yard. (The official line is that PayPal chose San Fran's Ghirardelli Square because "it's a place filled with small businesses and retailers," things that San Jose apparently does not have.)
Having first gotten in close, eBay chief exec John Donahoe then got off a trio of straight jabs at Square in a comparison with Here: “One, [Here] is better … Two, [Here] will be backed by PayPal, which means it will go global fast … Three, PayPal can now offer merchants … everything they need to compete in this new commerce environment, online, mobile and now offline,” he said.
Whether the product is better — or more to the point, whether merchants will like it better, which isn't the same thing at all — time will tell. There's certainly no disputing that PayPal's critical mass and global acceptance can help the company to make much faster inroads into the mobile payments market than Square has so far. It's also clear that PayPal's system offers greater functionality than Square's. More on that shortly.
PayPal Here: look, feel and functionality
The device itself is pretty much what everyone expected after all the media leaks. Triangle-shaped? Yep. Blue? Yep again. One ingenious feature PayPal designed into its sleek little device is a triangle that swivels down over the front edge of a mobile screen to stabilize the dongle and keep it from spinning in circles during a card swipe. This design also may prove to be easier on the phone jack than Square's dongle, which sticks out from the top of the phone with no support, just begging to get bent.
As for features, PayPal clearly has an edge. Not only does Here accept all the same plastic as Square, but it also adds the PayPal card (no surprise) and check-processing capability (a nice surprise for merchants whose customers still shlep a checkbook). The merchant can scan checks to submit — and credit cards, too, in a pinch. So if the dongle runs out to party, the mobile app can keep transactions moving. Here also tracks cash sales and generates electronic invoices to send to customers.
The PayPal mobile app that operates the dongle is comparable to Square's in its clean and simple graphic design and user-friendly interface. Also like Square, PayPal has developed a companion app for consumers, called Local, which functions mostly like the Card Case app owned by Square.
And then there's the merchant fee thing. PayPal is starting out by undercutting Square's fee by five hundredths of a percent, that is, 2.7 percent as opposed to 2.75 percent. Plus, along with their free Here device and app, merhants also get a PayPal debit card they can use to earn 1 percent on eligible purchases. In effect, merchants who use the card can lower their fee to 1.7 percent.
PayPal Here: features
In a post-unveiling news release, PayPal gave a rundown of Here's bells and whistles:
"Helping small businesses grow and accept payments has been in PayPal’s DNA since its inception 14 years ago," PayPal’s vice president of mobile, David Marcus said in a statement. "We’ve heard small businesses loud and clear. They don’t want to miss sales opportunities because they can’t accept the payment type that their customers want to use. They want quick access to their money, a reliable card reader, and one transparent, low fee to process these payments ... we’ve been able to bring all of these key features together into a product that’s so simple to use."
Starting immediately, PayPal will ship a few thousand Here units — all Apple iOS-driven — to selected merchants in the U.S., Canada, Australia and Hong Kong. All others in those markets can place orders now for units to ship next month, at which time an Android-operated version also will be available.
For a video demo of the PayPal's mobile payment solution, visit the PayPal Here website.
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