PayPal to Enter Crowded European Mobile Card Reader Market (Feb. 25, 2013)
Feb. 25, 2013
PayPal continues its diversification into brick-and-mortar payments with the announcement that it will expand its PayPal Here mobile card reader to Europe, beginning in the U.K. this summer. The European iteration of PayPal Here will differ from the version launched in the U.S. nearly a year ago in some key ways, due largely to the continent’s chip-and-PIN payment standards. Rather than a triangular dongle that plugs into a mobile device’s headphone jack, the new system will feature a separate handheld device that includes a keypad and connects to Android and iPhone devices via Bluetooth. Instead of swiping a payment card, an EMV-chip enabled card is inserted into the device and the customer enters his PIN using the keypad.
With the expansion of PayPal Here into Europe, PayPal is throwing its hat into a crowded ring. Unlike the U.S. mobile card reader market, in which Square got out to an early lead and still enjoys a competitive advantage, the landscape across the Atlantic is wide open, with startups including Sweden’s iZettle, Germany-based payworks and London-headquartered payleven jockeying for market share alongside more established firms such as British mobile carrier O2. Just last week, iZettle released a similar chip-and-PIN card reader after resolving a six-month legal impasse with Visa Europe over security issues related to the firm’s previous version of its reader, which did not require a PIN to be entered. And earlier this month, another startup, Britain’s mPowa, inked a deal with Portugal Telecom to offer a white-label version of its card reader, the latest move in the company’s planned global expansion.
Despite the competition, PayPal is betting its focus on meeting the wants and needs of its business users will enable Here to succeed in Europe. “[PayPal Here] reflects the huge amount of time we spent talking and listening to small businesses,” noted Hill Ferguson, vice president of global product, PayPal. “They are the core of PayPal’s business and they’ve told us that they want a simple, secure way to take card payments anytime and anywhere they trade,” Ferguson wrote in a post on the company’s blog announcing the Here expansion.
PayPal will charge European merchants a “competitive purchase price” for the Here card reader, the company said, along with a transaction fee close to the 2.75 percent rate charged to U.S. users. The devices will be rolled out to select U.K. businesses over the coming months, with a full U.K. launch this summer and additional European countries to follow after that.