PayPal Inc.’s impending move into face-to-face transactions enabled by VeriFone Systems Inc. mobile point-of-sale terminals has the eBay unit developing a reseller program, Laura Chambers, PayPal senior director of mobile, tells ISO&Agent Weekly.
“We will work proactively with independent sales organizations to ensure the [mobile] business model works,” Chambers says. Details are not yet available because the program is in its early stages, she says.
The VeriFone-enabled PayPal acceptance service should be available after Jan. 1, the terminal maker says.
PayPal is a strong competitor for e-commerce transactions. In 2009, PayPal, which like VeriFone is based in San Jose, Calif., handled $72 billion in payment volume, a 20% increase from $60 billion the previous year. PayPal’s merchant-services segment processed $39.5 billion in payments last year, up 33.9% from $29.5 billion in 2008, PayPal says.
VeriFone PayWare Mobile users that have Apple Inc.’s iPhones would be able to accept PayPal funds by bumping their phones with PayPal users’ iPhones under an agreement between PayPal and VeriFone.
Expanding Volume
The agreement also calls for VeriFone to use its PayWare Mobile card-encryption sleeve to expand PayPal payment acceptance via mobile phones and to integrate PayPal with online and point-of-sale environments. In addition, the terminal maker would promote PayPal and the bump funds-transfer function to its reseller channel, and PayPal would market PayWare Mobile to its user base.
“Merchants tell us they want us in more of these transactions,” Chambers says.
Two years ago, PayPal had $25 million in mobile transaction volume, and it expects to handle more than $700 million in such volume this year, she says.
PayPal in October also added Bling Nation Ltd. payment functionality to its iPhone app. That followed the September VeriFone announcement that it was adding Bling Nation acceptance to its terminals.
Bling traditionally has relied on community banks to make deals with local merchants for its alternative payment scheme, but it now is banking on deals such as the ones involving PayPal and VeriFone to grow even faster.
PayPal is working closely with VeriFone to develop the reseller program, Chambers says. “We are working with VeriFone to get the right model,” she says.
For its part, VeriFone says its reliance on ISOs as a sales channel is an important element to the PayPal deal.
ISOs, and processors, will have another payment method to talk to merchants about, Paul Rasori, VeriFone senior vice president of global marketing, tells ISO&Agent Weekly.
Realizing some individuals may be concerned about PayPal’s growth, VeriFone and PayPal “understand the value” of ISOs and their sales agents, Rasori says. “We don’t have a direct-to-merchant strategy whatsoever,” he says.
For PayPal, there has to be a revenue share to get access to VeriFone’s sales channel, Rasori says. He expects the amount will be “in line with what [ISOs] typically make from normal credit and debit card transactions.”
A Race
It is clear to Barry Sloane, chairman of Newtek Business Services Inc., that PayPal wants more ways for consumers to use their service. “From a business standpoint, it makes sense,” Sloane tells ISO&Agent Weekly.
New York-based Newtek offers its merchants a product called NewtPay, aimed squarely at PayPal that offers lower rates than PayPal.
“It’s a race to acquire the customer,” Sloane says, which he sees as the ISO or acquirer.
With Newtek’s strategy set, Sloane says PayPal has to determine its strategy. “It will be interesting to figure out where they ultimately position themselves,” he says.
The advent of PayPal into face-to-face transaction is certain, says Adil Moussa, an analyst at Boston-based Aite Group LLC.
“They’re going to do it,” Moussa says. He suggests that PayPal one day will have its own payment network. With that goal set, the next big question is how to build it, Moussa says.
That is where Bling Nation, because of its connection to banks and merchants and its Bling Tag, become important, he says. “That allows the relationship to happen at the merchant.”
ISOs should be preparing to start selling payment services such as this, Moussa says.
“This is going to be the way of the future,” Moussa says. He does not think that the sale pitch will be difficult for ISOs and their sales agents to pick up.
“It will be a matter of talking to merchants and the opportunities for merchants,” he says. Merchants likely will not pass on adding another payment-acceptance method because their need for revenue is so great, Moussa says.
“It’s very painful for a merchant to turn down a transaction,” he notes.
