PayPal, a huge name in accepting online payments, is jumping into the world of local small businesses accepting credit cards with PayPal Here. It’s a new service, not fully rolled out yet (as of March 2012).
|The PayPal Here triangle reader is sure
to remind you of the Square reader.
It strikes me as quite similar to Square, but with some very important differences. Square has been very popular with rural small businesses including farm stands and all sorts of fair and festival exhibitors. I accept credit cards with Square at my liquor store now.
Like Square’s simple (and square) card reader that plugs into the audio jack of a smartphone or tablet, PayPal Here uses a simple (but triangular) card reader that plugs into the audio jack of a smartphone or tablet.
Businesses can snap a pic of a credit card to complete the transaction if the card reader isn’t available or the card won’t scan. It can accept checks the same way: snap a pic to deposit the check. In comparison, Square lets users key in a credit card number if a card won’t scan, but it won’t accept checks. On both services, the business pays a higher rate on “manual” credit card transactions (when it is captured by photo or by typing the number in).
Customers can pay without cash or cards using their PayPal account and the PayPal app on their smartphone. This is similar to the Square CardCase app, though PayPal has a much larger user base to possibly convert over to mobile payments.
Payments are deposited to the business’s PayPal account. The business can use a PayPal debit card to access funds immediately at ATMs. A bank account transfer is supposed to take about 3 days. Square deposits funds into the business’s bank account, usually the next day. I’m a little leery of having funds going straight to PayPal. For the volume of business our store does, going to an ATM or waiting 3 days would not be a good solution, but for smaller volume sellers, it could work.
The rate for credit card transactions is 2.70% currently, putting it slightly below Square’s 2.75% rate. Both services are mercifully free of monthly fees and other similar charges common with traditional credit card processing. Checks are accepted without a fee.
The iPhone and Android apps are said to be rolling out soon, and the card reader triangles are apparently on a wait list. I checked the Google Play Store (which used to be called the Android Market), but didn’t see it yet.
Bottom line: This is more bad news for traditional credit card processing and more good news for small businesses.
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.