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PayPal Aims to Compete With Square

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Though currently Square is arguably the unquestioned titan atop the world of mobile credit card purchase processing, PayPal may now be looking to cut into that business by undercutting the popular startup.

In the very near future, PayPal – the payment processing company owned by eBay – will likely introduce its own plug-and-swipe mobile credit card reading device in an effort to compete directly with Square, according to a report from Bloomberg News. While Square, a tech startup created by former Twitter executive Jack Dorsey, currently has a huge advantage in the field, PayPal will create its footprint by targeting smaller businesses, and will do so with a lower cost for processing transactions.

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Square currently charges businesses using its mobile credit card readers, which plug into the headphone jacks of devices like iPhones and Android handsets, a transaction fee of 2.75% of the total purchase value, but PayPal’s card reader will levy a fee of 2.7%, the report said. A small distinction, but an important one that can help smaller businesses with thinner margins save money over the course of the year.


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This is PayPal’s second foray into the world of brick-and-mortar, real-world transactions in a relatively short time after it got its start almost entirely in the online realm, the report said. Earlier this year, the company also forged a deal with the Home Depot to allow customers in its stores to complete transactions with their PayPal accounts at the register.

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“Everybody is thinking that everyone is going to pay for everything with their mobile phone,” Sam Shrauger, vice president of product and experience at PayPal, recently told the news agency. “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.”

Most experts agree that mobile purchases are going to be the next wave of the future in the purchasing world, and could be worth tens of billions of dollars or more annually by the end of 2015. However, many say that the largest hurdle to clear will be consumers’ willingness to adopt a new method of payment. Once that is cleared, experts say adoption will spread quickly.

Image: Jorge Quinteros, via Flickr

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