VeriFone Systems Inc. said Tuesday it has agreed to configure its terminals to accept purchases made with Bling Nation Ltd.'s mobile payments system.

The deal also will help extend acceptance of PayPal Inc.'s online payment service to retailer locations nationwide.

The 2,000 employees at PayPal's Palo Alto, Calif., headquarters can already make payments from their PayPal accounts, by waving contactless BlingTag stickers at BlingBox payment terminals.

As part of a follow-up to this test, Bling is distributing to merchants in the Palo Alto area VeriFone's VX810 Duet countertop and wireless VX 680 terminals that accept BlingTag payments.

Early next year, the more than 370 resellers of VeriFone's PayWare Connect transaction-gateway service will begin to offer the Bling and PayPal service alongside traditional credit and debit card acceptance to merchants nationwide, said Paul Rasori, VeriFone's senior vice president of marketing. VeriFone will support the training and help promote the terminals, he said.

"It's the first implementation that brings [credit and debit cards] and alternative payments together into a single" terminal at the point of sale, Rasori said.

Consumers typically attach the quarter-size BlingTags to their mobile phones, though they could affix them anywhere. When they tap their tags on a BlingTag reader, Bling sends them a text message immediately notifying them how many loyalty points they have accumulated at that particular merchant, and they may redeem their points immediately as well.

Since its launch about 14 months ago, Bling's business model has been focused on signing up community banks that have connections locally both to merchants and to consumers to enable "on-us" direct debit payments using BlingTags at the point of sale. Bling plans to continue with that strategy, even though the pace of rollouts has been relatively slow.

But the company anticipates faster growth in BlingTag acceptance through its deals with VeriFone and PayPal. "We can gain scale much faster with well-known brands like VeriFone and PayPal," said Meyer Malka, Bling Nation's founder and co-chief executive. "We can get into stores we couldn't get into before."

Bling also has discussions under way with some college campuses, but Malka said it is too early to reveal specifics.

Merchants will continue to be the primary distributors of the BlingTags because they tie in to their loyalty programs. But they also can use the tags to reduce their cost of accepting electronic payments, Malka said.

Bling Nation charges merchants a standard rate of 1.5% of the sale to accept BlingTags for purchase, regardless of whether the payment is through PayPal or a direct debit. That rate can be about half the fees to accept credit cards, Malka said.

The full retail price for the BlingBox, which includes a VeriFone terminal, 100 BlingTags, and point of sale marketing materials, is $199, but with introductory rebates the cost drops to less than $100, a Bling spokeswoman said. "We are not pricing the terminal separately at this point, since it's all part of the BlingBox starter kit," she said.

Merchant customers pay Bling $59 per month to support their BlingTag payment and loyalty programs, Malka said.

Malka envisions Bling eventually supporting Near Field communication technology, which would enable terminals equipped with NFC chips to communicate loyalty-program information directly and instantly with phones equipped with similar chips, eliminating the need for the text messages. But the Bling system is agnostic to technology, as long as it supports "tap and go," he said.

"Tapping is the winning gesture, and instant feedback is what's so cool and convenient about it," Malka said.

The agreement may bring PayPal acceptance to retail locations, but PayPal does not view it as part of the company's internal acceptance growth strategy, said spokeswoman Kimberly Conley. "We no longer choose where PayPal will be accepted; it's where our partners bring us," she said. "Bling brings PayPal to the brick-and-mortar world for the first time, but it's not us consciously deciding to go there but the willingness of a partner to use us in creative ways." PayPal is a unit of eBay Inc.

For VeriFone, the Bling Nation deal represents the beginning of more agreements with companies not traditionally involved in the payments market as the terminal maker looks for new ways to use its network connectivity with merchants, Rasori said.

"This is the first of a series of announcements in the next six to nine months that will have digital-couponing and social-media ties," he said. The VeriFone network "connects users and provides access so nontraditional companies may play a role at the point of sale. … And we're providing new services our channels can sell to drive incremental margins for the services they sell to merchants," Rasori said.

Peter Quadagno, president and CEO of Quadagno & Associates, a West Chester, Pa., consultancy, agrees with VeriFone's strategy to offer more value-added services, and he views the deal as a positive one for all the parties involved, including PayPal.

"PayPal has been looking for ways to get to the point of sale, and perhaps this it," Quadagno said. "And every retailer out there wants to increase foot traffic, and loyalty is the way they see to do it."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.