PayPal is revamping its lineup of mobile point of sale offerings, expanding developer tools and adding EMV in the U.S. But its new support for Microsoft devices may have the most impact as it pursues merchants that can already get payment capabilities elsewhere.
PayPal, a unit of eBay Inc., has unveiled a new version of PayPal Here card reader that can operate with the Microsoft Surface Pro 3 tablet and certain Windows Phone handsets. These devices are typically overlooked by the payment companies that focus on supporting the Apple and Android ecosystems making them appealing to a company like PayPal that needs to make a land grab to secure its place in the mobile payment ecosystem.
"As the mobile point of sale trends mobile, PayPal is working to ensure it has a place at the table," said Jordan McKee, a senior analyst at 451 Research.
Microsoft and PayPal will also work with independent software vendors such as Canvas and iConnectPOS to develop custom business apps for the Windows SDK platform. PayPal also recently deployed its consumer app on other less-prominent platforms, including BlackBerry handsets and the Pebble smartwatch.
The addition of PayPal Here on Windows devices extends this strategy to PayPal's mobile point of sale offerings.
"The more PayPal Here solutions that PayPal gets into the market, the broader its acceptance network becomes for its mobile payments initiative," said McKee. "In many senses, PayPal is leveraging Here to lay the foundation for mobile payments in the small- to medium-sized business segment."
However, many merchants can also get these services (on Apple and Android devices) from sources ranging from vendors like Square to megabanks like JPMorgan Chase. And despite Apple's reputation as a provider of pricy hardware, its current iPad Air starts at $499, making it a much cheaper device than Microsoft's Surface Pro 3 actually a full Windows computer crammed into tablet form which starts at $799.
"I don't think the competition, such as Square, Roam, etc., will be too concerned," said Andrew Copeman, an analyst with Aite Group. "PayPal is undoubtedly a major player with significant volumes of card and mobile transactions passing through its systems, by my stance is that it is still struggling to positon itself as a leading point of sale acquirer in the card-present environment."
Later this year, PayPal plans to introduce an EMV-compliant PayPal Here reader to the U.S. following the device's earlier deployments in the U.K. and Australia, where fraud dropped 80% after the device's introduction, PayPal said. Mobile point of sale vendors such as Square and Ingenico's Roam are also using EMV compliance to attract U.S. merchants ahead of the card networks' October deadline. After Oct. 1, most companies that cannot support EMV payments face a shift in fraud liability.
"The new announcement allows PayPal to position itself as a champion of EMV migration, but again this is not a unique selling point," Copeland said.
PayPal is also expanding its developer tools to tie mobile point of sale to merchant services. The PayPal Here SDK that was in pilot for iOS and Android devices will formally launch later this month, enabling developers to integrate PayPal Here payment functions into custom small business apps. That can include checkout benefits, card acceptance, CRM, inventory management and invoicing.
"Its SDK strategy serves as an effective means of expanding its influence further than it could on its own," McKee said.
PayPal has long sought to build an in-store presence through partnerships, and PayPal Here now becomes a mobile component to that strategy. Partnerships are a critical component of scaling and PayPal excels at that strategy, McKee said, but other mobile point of sale vendors also have SDKs.
PayPal definitely needs to refine its approach to PayPal Here as it revamps the product for the U.S., Copeland said.
"From the evidence to date in the U.K. I would have to say its impact has been marginal," Copeland said. "Leaders in the [mobile point of sale] sector in the U.K., such as iZettle, Payleven, SumUp and others are more prevalent, have the same or lower cost services, and the card acceptance device tends to be much smaller and neater."
But given PayPal's size, its moves will also apply pressure to other mobile point of sale companies, said Windsor Holden, head of forecasting and consultancy for Juniper Research.
"Realistically it was only a matter of time before PayPal went down this road," Holden said. "As in many m-commerce segments, the smaller, new entrants only have a relatively small window of opportunity before the larger players muscle in."
PayPal did not release uptake numbers for PayPal Here and did not answer questions about its new products before deadline.