PayPal Targets VISA/MasterCard Posted by AVCU on 10:15 AM

The popular online payments processor PayPal, owned by eBay, isn't stopping its foray into retail merchants with the Home Depot pilot we previously reported. A store version of PayPal is already in 51 Home Depot stores, with eBay planning to have it installed in all of the home improvement chain's stores next month. But they're not stopping there. Reuters reports that PayPal is expected to be implemented in Office Depot stores nationwide next, and that plans are in place to introduce PayPal as an alternative to paying with VISA or MasterCard in 20 big merchant chains by the end of this year.

How do you use PayPal in a store? As reported by Time's MoneyLand section:

• the payment terminal at the cash register includes a separate “PayPal” button along with the usual options like debit and credit.
• a customer choosing PayPal enters a mobile phone number and PIN for verification.
• the customer gets a paper receipt
• PayPal generates a digital receipt that goes in their PayPal account.

For customers not using a mobile phone number, PayPal will issue an access card with a magnetic stripe (like a debit or credit card) that contains the vital information, along with a PIN.

Why would merchants want to bear the burden of adding PayPal to their payment options mix? Although merchants pay a transaction fee similar to what they pay a card-issuing bank and network processor, but reportedly PayPal subsidizes the merchant costs on point-of-sale transactions in an effort to bring retailers online and grab market share.

For more details read the Time article and the Reuters article.