Mar. 19 – Ebay subsidiary PayPal launched its new mobile device for retail payments, PayPal Here, at an event in San Francisco last week. The new service includes a triangular “dongle” card reader, which plugs into a smartphone’s audio jack, and an app that controls the transaction.
PayPal Here targets small to medium sized businesses and is currently available to several thousand vendors in the United States, Hong Kong, Canada and Australia, with plans to introduce the service to other countries in the coming weeks and months.
PayPal’s official blog describes Here as a service “designed to help those merchants make more sales and grow their business with confidence.”
Following the U.S. launch, senior figures at PayPal have made it clear they plan to expand Here into Asia’s two largest consumer markets, China and India, over the next 12 to 18 months.
“Today, PayPal is used mainly for cross-border international payments for both countries,” Rupert Keely, PayPal’s senior vice president for Asia Pacific, told Reuters in reference to China and India. “The plan is to try to enter both markets for domestic payments.”
Keely said PayPal had applied to China’s central bank for a license, while the company is seeking to establish an office to enter the India market next year for domestic payments.
PayPal currently serves 100 million customers worldwide, using 25 different currencies and has 14 years of experience in secure online financial transactions. From its Asian headquarters in Singapore, PayPal coordinates the operations of six regional sales offices in Tokyo, Shanghai, Hong Kong, Taipei, Singapore and Sydney. The company is also supported by development centers in India and customer service centers in China and Malaysia.
The Chinese e-payments market represents a huge opportunity for PayPal, with online payments expected to exceed US$118 billion this year. China is also expected to become the world’s largest e-commerce market by 2015, according to figures obtained by Reuters.
Similarly, figures from India’s Internet and Mobile Association show that the country’s e-commerce market is expected to grow by almost 50 percent to over US$9.2 billion this year.
However, PayPal will have to compete with the major domestic players in those countries, which include the Alibaba’s Alipay and Tencent’s Tenpay in China, and CCAvenue and DirectPay in India.
Other global competitors in the e-payments market include Google Wallet, which stores customers’ card information in the Google cloud, and Square, from Twitter founder Jack Dorsey, which uses a similar square-shaped plug-in card reader. Square currently handles US$4 billion a year worth of transactions in the United States, but may be soon be looking towards other markets.
In addition to the card reader plug-in, PayPal Here also includes a scanning feature that uses the smart phone’s camera for payments made by check, but this is currently only available in the United States. It also accepts most major credit and debit cards, unlike its competitors.
PayPal will provide vendors with the dongle and app for free, but will charge a flat rate fee of 2.7 percent for all card transactions. The free reader currently works only on iPhones, but an Android app is due for release next month.