PayPal looks to make bigger impact on retail sector
PayPal, the eBay-owned online payment processor, has been vocal about its attempts to transition from the internet to the real world. Executive Don Kingsborough recently expanded on the company's plans to facilitate that shift, the Ottawa Citizen reports.
The digital payment processor has been particularly observant of the recent battles between retailers and traditional financial institutions over swipe fees. PayPal knows this is a contentious topic right now and senses an opportunity to win favor with retailers by subsidizing its new point-of-sale processing service, which implies merchants will have to pay significantly less than traditional fees if they opt for PayPal.
Discounts on fees aren't the only trick up PayPal's sleeve. The internet company also plans to share shopping and purchase data with retail brands, which will give them more insight into what people are buying and how customers are spending their money.
While PayPal still hasn't discussed how it will roll its new service out to retailers, the company plans to work with the biggest brands in the sector. Already, PayPal has partnered with Home Depot and an Office Depot test is in the works. The payment processor hopes to have more than 20 major retailers involved with the test program before the end of 2012.
"We are going to do it with the greatest brands in the world – Home Depot and every other top 100 retailer," Kingsborough told the news source. "There isn't a major brand who we haven't talked to."
PayPal's move to the physical world has caught the eye of many retail industry analysts, who categorize the shift as a high-risk, high-reward gambit. Consumers tend to prefer trusted financial companies when it comes to payment processing, but the recent falling out between merchants and credit card companies, along with rising ecommerce sales, may serve as a perfect storm for PayPal.
Whatever the outcome, PayPal is pursuing its expansion goals aggressively.
"2012 is trial and learn. 2013 and beyond is when we really scale it in the U.S. and globally and across categories," eBay chief executive officer John Donahoe notes. "That's the goal I'm holding Don to in 2012 – do we have a scalable product?"
Credit and debit cards remain popular, with a recent report from First Data suggesting transaction volumes of credit and debit cards increased during January.
