What's In Your Mobile Wallet? by Dan Rowinski

PayPalPayPal's Astonishing Arrogance

Everybody that follows the payments industry knows that there is a massive albatross that hovers over every innovation that comes to the market: PayPal. In its mind, there is no realm of payments that PayPal cannot conquer and control. The company chafes when other payment innovations, like Square or the Google Wallet, gain press acclaim. PayPal is almost never first to the market with payment innovations and it does not think it needs to be. The company watches how the market evolves, takes a step back and releases similar offerings, trusting to its brand name and ubiquity to cover the cost.

That is precisely what PayPal has done with its new mobile payments system, PayPal Here. It has all the innovation of a three-day old muffin. Instead of a "Square," it is a triangle. PayPal Here also puts credit card scanners Jumio and Card.io have also been put on notice. Going forward, can PayPal rely on its brand name to create a payments empire or will its arrogance eventually lead it to a path of ruin?

In a blog post, PayPal says, "So, you're asking, how is this different from other small business mobile payment solutions? The key differentiator is that it comes from PayPal, a trusted brand in the online payments industry with more than 100 million customers around the globe and years of proven payment innovation ... ."

Reading PayPal press releases and blog posts is an exercise in patience. If there is a more passive-aggressive technology company, readers would be hard pressed to find it.
PayPal Here is the company's first foray into the mobile credit card reading space. It will have a dongle (the triangle) and the ability to scan a credit card using a smartphones camera. As mentioned above, these innovations are nothing new.

PayPal thinks it can differentiate itself with a 2.7% interchange rate (1.7% with a PayPal debit card) but as we have seen in the market, mild swings of interchange have not affected which companies ultimately succeed (well, not until we get to the mystical land of "interchange zero").


This month's tip:

A more secure card reader is offered by UPC. See more information here. Card swipe interchange starts at 1.54% + $0.10 so PayPal's solution is a costly one.