PayPal to Offer Cards, Expand Point of Sale Trial This Week

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PayPal Inc., which has been testing a point of sale payment system with Home Depot, plans this week to expand that trial and offer consumers a card linked to their PayPal accounts.

The card will be made available online. PayPal, a unit of eBay Inc., has been testing a point of sale payment system that works with or without a card. If consumers choose not to use a card, they can make PayPal payments at the point of sale using a phone number and PIN.

PayPal, of San Jose, Calif., said this month that it is testing this system at five Home Depot stores. This week, it will expand the trial to 51 Home Depot stores: one in Atlanta, six in Omaha and 44 in the San Francisco bay area.

PayPal expects to have its payment system in all Home Depot stores by March.

"It needs to reach scale very quickly. This won't catch on until that happens — until it's ubiquitous," Anuj Nayar, a PayPal spokesman, told American Banker Wednesday.

The Home Depot test uses hardware from the French terminal maker Ingenico SA. PayPal has also begun working with middleware companies, including AJB Software Design Inc. in Canada, to ease integration of its payment system with brick-and-mortar retailers.

The new card will not function like a normal debit card. It will not have the user's name or account number printed on it. Instead, it will have encrypted data written to the magnetic stripe, used to provide access to funds via a link to PayPal. The card will have a rewards feature added by yearend, Nayar says.

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Comments (2)
Another example of the parallel being created between PayPal and financial institutions and a clear desire to superscede traditional credit and debit payment mechanisms. What's in it for the cardholder and how will PayPal position this solution in conjunction with their own debit and prepaid offerings?
Posted by Kevin P | Wednesday, January 18 2012 at 4:45PM ET
Kevin: PayPal is saying that it will eventually provide couponing and rewards options for retailers to increase the value proposition for consumers.
Posted by Sean Sposito | Wednesday, January 18 2012 at 5:47PM ET
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