PayPal is done taking baby steps.

The alternative payments provider revealed 15 new national retailers on May 24 that will eventually accept PayPal payments, as well as numerous agreements with terminal makers and point-of-sale software vendors that will significantly increase PayPal's presence as an option in brick-and-mortar stores.

New national retailers that will soon accept PayPal include Abercrombie & Fitch, Advance Auto Parts, Aéropostale, American Eagle Outfitters, Barnes & Noble, Foot Locker, Guitar Center, Jamba Juice, JC Penney, Jos. A. Bank Clothiers, Nine West, Office Depot, Rooms To Go, Tiger Direct and Toys "R" Us, PayPal president David Marcus announced at a press conference at PayPal headquarters in San Jose, Calif.

"We can't wait to launch with these great retailers and help them serve their customers better through PayPal," Marcus said.

PayPal, a unit of eBay Inc., has long provided online payment options, but in the past year has moved into the brick-and-mortar retail realm with a payment card tied to the company's digital wallet. PayPal users can also make purchases by typing their phone number and a PIN at the point of sale.

Most significantly, PayPal initially conducted tests using a PayPal payment card at Home Depot Inc. locations.

Home Depot has since announced that PayPal's payment method would be accepted at all of its 2,200 stores nationwide (see story). 

In addition to announcing the new retailers, PayPal prepared for the conversion of literally thousands of point-of-sale terminals to accept PayPal payments through separate agreements with San Jose-based VeriFone Systems Inc., Scottsdale, Ariz.-based Equinox Payments LLC and software providers Tallinn, Estonia-based Erply Ltd., Leapset Inc., ShopKeep.com Inc. and Vend Ltd., Marcus said in a blog post (see link). 

Marcus indicated that the barrage of agreements announced May 24 continues momentum the company built with its PayPal Here mobile card acceptance app(see story). 

The agreement with VeriFone calls for the terminal maker to add a PayPal digital wallet payment option. It will also include the PayPal option to all future terminals, VeriFone spokesman Pete Bartolik tells PaymentsSource.

Equinox Payments plans to essentially do the same thing, announcing that it has already added PayPal card and card-free software onto its new L5300 terminals. In addition, retailers who already have the terminals can update the software through a "key injection" system in which the retailer would not have to send in a terminal for upgrading, Equinox stated in a press release.

Clint Jones, president of Equinox, stated that three of the top 10 retailers in the U.S. use Equinox terminals, paving the way for PayPal's potential exposure to more retail sites.

Will Rossiter, senior vice president of sales and marketing for Equinox, tells PaymentsSource that many of the company's clients plan to work with PayPal. He would not name them.

PayPal's arrangement with Erply represents a software-based mobile payment method in which applications on Erply terminals at up to 46,000 stores in the U.S. will have the capability to communicate with PayPal software on Google Inc. Android handsets or Apple Inc. iPhones to initiate and complete payment transactions, Kristjan Hiiemaa, CEO of Erply, tells PaymentsSource.

"This represents a new way to pay at Erply terminals, with no plastic card swiping," Hiiemaa says. The PayPal interaction with Erply software represents the "next step" from PayPal's experiment with plastic cards at Home Depot stores, Hiiemaa suggests.

The system allows the merchant to send back coupons or instant rebates for using PayPal, making it potentially a better choice than Near Field Communication, the technology most commonly associated with immediate mobile payments, Hiiemaa contends.

PayPal has been working for a couple of years to develop payment capabilities at the point of sale, but the Home Depot arrangement simply established acceptance of PayPal payments, Gil Luria, analyst with Los Angeles-based Wedbush Securities, tells PaymentsSource.

Now, the company needs a way to encourage consumers to use PayPal at the point of sale, he suggests.

"So far, PayPal has not shown a compelling reason for people to use PayPal at the point of sale," Luria says. "So that's what I think would be next for them, having retailers tie in promotions or offer programs and discounts for using PayPal."

Just being able to use PayPal at a point-of-sale terminal is not enough reason for consumers to use it, Luria contends.

A new wave of activity from PayPal is not surprising to those in the payments industry.

Gary Marino, PayPal's senior vice president of global financial services, recently spoke at length with PaymentsSource about the company's vision for establishing various payment options for its customers through relationships with various retailers and payments industry vendors (see story). 

 

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