PayPal has taken a page from the Square playbook with today's launch of PayPal Here. This global solution allows small business owners to accept payments via credit card with a PayPal branded triangle shaped reader.
This solution is a long time coming. Square was first launched at LeWeb at the end of 2009 while PayPal were pushing their unsuccessful "bump" product. With more than ten years in the online payments space, PayPal will easily make up for lost time even though Square have had a two year head start on working with merchants in this space (and has recently been backed by Obama).
Not only does PayPal Here include this Square-clone but it allows merchants to use their phone camera to scan and process cards and checks and invoice directly from the mobile app itself. For small businesses who sell on and off-line, especially those at trade shows, fairs, and on the street, this mobile solution will allow them, for the first time, to literally accept payments anywhere.
PayPal are looking at this as a key part of their larger offline strategy. It will definitely give a wider scope for small businesses to accept payments but with the already stringent risk model in place for PayPal transactions, this new payment method may be more of a challenge than a solution. It is easy to imagine that large transactions or a quick succession of transactions will be flagged by the current fraud system, blocking the user from further transactions - or leading to their money being held for up to 180 days.
Of course this is a worse case scenario, but after the difficulties seen by conference hosts and digital media producers in the past couple of years, it's an easy assumption to make. How will their system take hundreds of t-shirt sales at a festival, or the transactions after a taco truck has sat outside a club for a night?
At the moment, only a select number of businesses in the US, Canada, Australia and Hong Kong will be able to try PayPal's new blue triangle. Next month, PayPal Here will roll out to all other merchants in those countries with more countries expected to be announced soon.
Will this be the death knell for Square or can there still be multiple players in the space? We'll give it till the end of the year. If PayPal can maintain good customer relations and eliminate the pain points they already have with small merchants, more triangles than squares may be turning up at a farmers market near you.
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