PayPal has forged numerous partnerships to get its payment system to the point of sale, and as PayPal's technology evolves, the company has to ensure its own offerings don't overlap those of its partners.
In one notable example, PayPal began working with ShopKeep POS, which provides a cloud-based iPad point of sale system, in March 2012. But last month, PayPal announced it adapted its PayPal Here mobile acceptance technology for the iPad — essentially turning PayPal's smartphone-based product into an iPad point of sale system.
They key difference between PayPal Here and ShopKeep POS is the audience, PayPal says.
"We don't see this as cannibalizing our relationships with our existing partners," says Anuj Nayar, PayPal's senior director of corporate communications.
PayPal's offline strategy is broken into three initiatives: working directly with large retailers like Home Depot, partnering with hardware vendors to capture mid-sized businesses and providing an inexpensive system for small merchants, Nayar says.
PayPal Here was designed for the bottom end of the market, the cash-based merchants that don't have existing point of sale systems, he says. "We would never ask [merchants] to rip out their existing e-POS system for ours."
ShopKeep agrees that PayPal Here doesn't directly compete with its own offering.
"Yeah [PayPal Here] has some of the same functions, but it's not for retailers that are doing a lot of volume like our customers do," says Jason Richelson, CEO of ShopKeep.
Richelson says PayPal Here isn't a fully functioning point of sale system with complete reporting, inventory management and employee tracking.
"Doing [point of sale] is hard; everyone thinks it's easy and they can just tack it on" to other products, says Richelson. The point of sale hardware industry can be challenging because of all of the complex functions that require a support desk to be available at all times.
The PayPal Here iPad or mobile app works great for sellers at a flea market or anyone taking 10 to 20 swipes per week, says Richelson. ShopKeep is a designed for merchants taking 50 or more swipes per day, he says.
"The most important part of [PayPal's] strategy is to make it possible and attractive for retailers to accept PayPal," says Gil Luria, an analyst at Wedbush Securities. "In order to pursue that they are partnering with companies that can facilitate that interaction with retailers … but also trying to create some of these tools directly."
PayPal also offers a mobile wallet app, which lets consumers pay ahead with their PayPal account at Jamba Juice and other retailers. This app seems to compete with NCR Mobile Pay, yet NCR and PayPal partnered in January.
"There is no contradiction; there are millions of retailers that need these types of solutions and very few have them," Luria says.