PayPal in Retail?

Will PayPal in Retail work with Home Depot or any retailer for that matter? Probably not.

I have been trying to wrap my brain around all the changes in the payment industry and understanding what is going on. I certainly have a good idea but much of it is cloudy to me. With EMV (smart card or chip card processing), contactless payments, mobile payments, Square partnering with Starbucks, PayPal in Retail, Google Wallet, Dwolla and many more; it is hard to wonder how the industry is changing and how this will really affect merchants in the long run or consumers for that matter.

Seems everyone is trying to get on the payment bandwagon and begin to start sharing in the revenues that many of us in the industry have been privy to for years. PayPal has been in the market for quite some time and they filled a need that most merchant processing providers didn’t focus their attention on. For good reason too. This was the small business owner that was lucky to do maybe 2 or 3 transactions a month. PayPal provided easy underwriting, somewhat decent and simplified pricing and nice plug and play features for ecommerce functionality. The only catch was the way money was handled by having a holding account as opposed to transactions being directly deposited into a merchants bank account.  PayPal filled that niche and has become a big player in the industry. Now they are trying to go after the retail industry and I am not sure how successful it will be. PayPal in Retail? We will see.

 As a consumer, PayPal in retail doesn’t excite me

Back in March of 2012 Home Depot introduced PayPal in retail as one of their payment options on their POS terminals. I wasn’t quite sure what to think at first since my perception of PayPal is only an online payment provider. I never really understood the advantage Home Depot had in offering PayPal on their POS terminals. I have asked the store I frequent as to how many people have used this payment option and they always say none. For me as a consumer, I simply don’t like using my PayPal account, and try to avoid using it when making online purchases. That’s if I have the option. Using PayPal in retail at Home Depot? Not there and no where for that matter!

PayPal isn’t exactly consumer friendly

I recently had an interesting experience with PayPal. One of my vendors was automatically deducting their fees from my credit card using PayPal. After about two years PayPal gave notice that I exceeded my payment limit and shut me down. I basically had two options. Either get a PayPal credit card or use my bank account and debit it with ach processing. At first this was quite frustrating, but I figured out a way to get around it and continued using my Visa credit card. I figured this was PayPal’s attempt to lower costs with debiting my bank account (ach processing) or issuing their own credit card. I could then use this card at Home Depot or where ever PayPal is installed on a merchants POS system. Personally, I don’t think their attempts will bring much to the market. It has to be an easier or better payment option for their customers than what they currently have with typical credit card processing. Who wants to add another credit card to their wallet that brings no rewards? Of course, PayPal does offer the customer the ability to enter a mobile phone number and pin number on file with their PayPal accounts at the point of sale. According to Computer World this is how 90% of their transactions happen at Home Depot but the amount of transactions is very small. Seems like a pain to me.

Personally, I think the only way PayPal in retail can work is to simply provide the back-end credit card processing for merchants and let customers use their standard credit cards like they always have. Just like Square has and their new partnership with Starbucks. After that, those of us in the industry can sit back and let the big retailers learn just how bad PayPal and Square are when it comes to processing, reporting, reconciling and the basic handling of money.

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