Online payment company PayPal has just recently teamed up with credit card company Discover to offer a unique service in brick-and-mortar stores which expands payment options for consumers when shopping “offline”.
Over time, PayPal’s popularity has grown as an alternative form of payment when making online purchases, donations, reservations or other monetary exchanges. Many people have embraced this straight-forward form of payment or transfer of funds.
Discover and PayPal announce starting next year millions of “traditional” merchants will also have capability to accept consumer payment through PayPal.
According to the New York Post, commencing sometime in 2013, 7 million merchants that are set up to accept Discover’s credit card will also accept PayPal for in-store purchases. TechCrunch reported that in the future the ability to pay with a PayPal plastic card may expand to international merchant locations.
“We’re delighted to enable PayPal’s efforts to provide their U.S. customers acceptance at millions of physical point-of-sale locations by leveraging our unique payment services assets,” said Diane Offereins, President of Discover Payment Services in a release. “The establishment of this relationship is a major industry milestone, which will help shape the emerging payments landscape by bringing together an established direct banking and payments company with a leading commerce enabler to create an alternative payments option for consumers at the point of sale.
“This initiative will result in real change and innovation for the industry by bringing new technologies to the point of sale that benefit merchants and PayPal customers,” Offereins said.
It seems convenience may be one of the potential benefits for consumers. How it will work is PayPal will send plastic cards to its customer base, or alternatively, customers can use a PIN code in conjunction with their mobile phones. Users can swipe the cards at stores, and the merchants will collect payment from PayPal accounts. From the description of how consumers can use the new card, it seems as if it will work along the same vein as a debit card works.
For businesses, a potential advantage will come with the ability to offer customers another way to pay. While simultaneously offering consumers more choice, the benefit to businesses is if they are already established to work with Discover’s network, it won’t cost them any additional costs because the PayPal card will work with existing hardware and software. Existing point-of-sale (POS) systems do not need to be altered.
That being said, it is not clear at this time is what the pricing will be for retailers. For some time now, some retailers have been struggling with the high costs that comes with offering customers the convenience of credit and debit cards, which the Durbin Amendment was created last year to address. It is not clear at this point if the PayPal option will entail high fees for merchants or if it will be more cost-effective. It is quite possible this new partnership may be a win-win for all involved.