US Retail: PayPal And Discover Partner To Offer In-Store Payment Service

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(Photo: Stock.xchng)
(Photo: Stock.xchng)

BUSINESS

  • PayPal access to be offered starting 2013 in over 7 million stores 
  • PayPal has over 50 million customers in the US, should boost Discover transaction volume
  • Discover deal to help expand PayPal offline services, offer could go global

PayPal has joined forces with Discover Financial Services to let customers make in-store purchases through smartphones or payment cards connected to their PayPal accounts. The service will launch in 2013 and be offered across 7 million “brick-and-mortar” stores that are part of Discover’s US network.

Merchants that already accept Discover cards will add PayPal as an alternate in-store payment option, and be able to accept PayPal without replacing or upgrading point-of-sale hardware or software.

Purchases will first go through Discover’s network, and then be transferred to PayPal, who will charge retailers a small fee-per-purchase made via PayPal accounts.

PayPal has over 50 million customers in the US, and the new service offers the same convenience and security they enjoy online. PayPal customers should give Discover – already a well-recognized US direct bank and electronic payment service – a boost in transaction volume and credibility with merchants.

Diane Offereins, President of Payment Services at Discover, predicts that the agreement with PayPal could “close the acceptance gap [with merchants] that is causing PayPal to trail payment service leaders Visa, MasterCard and American Express.”

Discover Agreement To Boost PayPal Offline Services 

PayPal’s agreement with Discover Financial Services is part of its growing strategy to tap into the offline world, where the majority of US retail spending takes place.

Earlier this year, PayPal initiated its offline plan by making a deal with Home Depot as well as 15 more retailers, including Office Depot, Jamba Juice and JC Penney, to allow customers to purchase goods in stores using their PayPal accounts.

Teaming up with Discover is PayPal’s most far-reaching offline move to date. Further, there is potential for PayPal’s agreement with Discover to go global as PayPal’s over 113 million active users worldwide cover 25 different currencies and 190 global markets.

Key Statistics – Global Online Payment Market

  • Compared to 2011, the volume of mobile payment transactions is expected to rise by 75% globally this year; PayPal seeks to capitalize on this trend with its new PayPal Mobile service (source: Ystats).
  • Revenue for the alternate payments industry (online, mobile and contactless options) will rise from $740 billion in 2010 to nearly $3 trillion in 2015, a CAGR of over 17% for the five-year period 2010 to 2015 (source: Business Insights).
  • Over the period 2011-2015, the Global Mobile Commerce Payment market is expected to grow at a CAGR of more than 80% (source: TechNavio).

By Christelle Agboka for
Christelle Agboka is a freelance journalist based in Kingston, Ontario, who covers business and economy news.

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