ShopKeep POS is adding credit card acceptance through PayPal at a 2.7% per-transaction fee, which it says is competitive with other processing options.

ShopKeep POS, an iPad point of sale provider for brick-and-mortar retailers, negotiated the fee for merchants who accept cards via PayPal. ShopKeep POS will also waive fees for up to $20,000 in transactions per month through its partnership with PayPal, addressing pricing pressure as competition heats up for mobile card acceptance.

ShopKeep's 6,000 merchant clients, which already had the option to accept mobile PayPal payments, will see the new rate as part of a ShopKeep POS update scheduled for the week of June 17. The company is also introducing a new iPad Stand, which includes a cash drawer, receipt printer and MagTek credit card reader. 

"Competing on price is always exciting but never a long-term strategy," says Jason Richelson, CEO of ShopKeep POS. "It's really about the functionality and service level that you offer."

The 2.7% fee is lower than the 2.75% fee Square charges for Square Register, it says, though Square also offers a 0% transaction rate for merchants that pay a flat $275 a month fee. Other companies also boast of low pricing — including PayPal itself, which offers free processing through the end of the year as part of the "Cash for Registers" promotion it launched on June 13. SCVNGR's LevelUp also offers free processing, though it charges for related services, and Koupah offsets its fees by offering ad revenue.

ShopKeep POS, Erply, Leaf, Leapset, NCR Silver and Vend participate in PayPal's free-processing promotion, which also applies to merchants that use the PayPal Here mobile card reader. PayPal typically charges 2.7% for a swiped card payment, while ShopKeep charges a $49 monthly fee to use its system.

ShopKeep also uses other processors, but Richelson would not reveal their pricing, saying it varies based on card type and merchant category. These fees are typically the card interchange plus other processing fees that include variables such as security, set up and payment gateway access that in many cases would total more than 2.7% when all costs are taken into account. However, some processors offer better pricing for high-ticket transactions, he says.

ShopKeep POS' program takes advantage of an existing integration between PayPal Here and ShopKeep POS.

"PayPal Here works with all of our existing hardware," says Richelson. Users log into their ShopKeep POS account and then connect to their PayPal account, a process that takes about a minute, Richelson says.

For ShopKeep POS, the new rate is a chance to attract new merchants to use its mix of payments and other services, such as inventory management and personnel functions. 

Square did not provide comment on ShopKeep's moves by deadline. In response to an inquiry, it referenced its Square Register point of sale software and its recently launched Square Stand, an iPad card reader that can replace a stationary point of sale terminal.

ShopKeep POS' new pricing, which PayPal enabled, comes the same week social payment company Chirpify reduced its fees by moving away from a reliance on PayPal.

PayPal did not return a request for comment by deadline. PayPal has previously said its PayPal Here product and ShopKeep POS target different audiences. ShopKeep POS' merchants can also access other PayPal technology, such as a cloud-based option that allows consumers to pay with their mobile phone at participating retailers by launching the PayPal mobile app.

"People can pay without showing anything at the register," Richelson says, adding that the system leverages technology that's already available. "Millions of people have the PayPal app on their phone."

While there's not a currently "price war" for mobile payment acceptance, "as the market gets increasingly congested, there is a risk of increased price competition," says Zil Bareisis, a senior analyst at Celent. "I believe the intensity of any potential price war will be determined by how the transactions ultimately are viewed by the participants. Many mobile point of sale players have their sights on broader relationships and point of sale merchant services."

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