PayPal: Online to In-Store
PayPal is best known as a secure online payment system, favoured by users due to its facilitation of payments without any card details ever being entered on the merchant’s site. In a world where online ‘card not present’ fraud is a significant concern for consumers, PayPal has become a global leader in online payment systems with both consumers and retailers appreciative of the fraud protection it offers.
PayPal links to the user’s chosen cards or bank accounts with the information heavily encrypted. The most recent stage in PayPal’s development is the move into in-store payments as well as online.
How Does It Work?
PayPal is a digital wallet that allows consumers and businesses to make and receive electronic payment transfers. In brick and mortar retailers who facilitate PayPal payments, customers open their PayPal app, select the store, and check in. The customer shows the cashier their app code who then matches the customer with their PayPal profile which will have appeared on their point-of-sale (POS) payment terminal. The merchant then simply taps on the customer’s profile and registers the sale as they would any other, with the payment being taken directly from the customer’s PayPal account.
Which Retailers Accept PayPal in Store?
PayPal launched in-store payments in Australia in 2012. Since then the network of retailers signing up to facilitate PayPal payments has been growing quickly. Early adopters in Australia were the likes of education technology specialist Crayons and a number of small businesses such as coffee shops and bakeries, with the list growing steadily. While take up has not been lightning fast, the US technology giant has confidence that within another couple of years in-store PayPal payments will have become mainstream. Early adopters have been impressed, with Crayons managing director Jonathan Ladmore describing it as “a very seamless experience for customers.”
Cost, Set Up, and Value Added for Retailers
For retailers, set up is easy and doesn’t require any equipment, as long as their POS vendor’s software has been upgraded to facilitate PayPal check-in by customers. The only thing the retailer has to do is go through an application security check process. This does take a little time and a company's business PayPal account is restricted during the process. Fees are a little high. They are on par with the most expensive credit card transactions such as American Express and significantly higher than EFTPOS transactions.
However, offering a degree of mitigation for the fact that fees are a little higher than ideal, merchants have a number of value added advantages resulting from customers using PayPal for in-store payments. They are protected against fraud with 0% liability for any fraudulent transactions and also gain access to valuable customer information such as email addresses and previous purchases at the same store. This allows retailers to better build-up email marketing databases and to tailor better customer profile-specific loyalty programs.
PayPal is also moving into offering credit facilities, with retailers benefiting from receiving upfront payment while customers can be offered staggered payment terms with no interest if the balance is paid off within 6 months, which can encourage spending with retail partners.