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PayPal has taken a page from the Square playbook with today's launch of PayPal Here. This global solution allows small business owners to accept payments via credit card with a PayPal branded triangle shaped reader.

This solution is a long time coming. Square was first launched at LeWeb at the end of 2009  while PayPal were pushing their unsuccessful "bump" product. With more than ten years in the online payments space, PayPal will easily make up for lost time even though Square have had a two year head start on working with merchants in this space (and has recently been backed by Obama).

Not only does PayPal Here include this Square-clone but it allows merchants to use their phone camera to scan and process cards and checks and invoice directly from the mobile app  itself. For small businesses who sell on and off-line, especially those at trade shows, fairs, and on the street, this mobile solution will allow them, for the first time, to literally accept payments anywhere.

PayPal are looking at this as a key part of their larger offline strategy. It will definitely give a wider scope for small businesses to accept payments but with the already stringent risk model in place for PayPal transactions, this new payment method may be more of a challenge than a solution. It is easy to imagine that large transactions or a quick succession of transactions will be flagged by the current fraud system, blocking the user from further transactions - or leading to their money being held for up to 180 days.

Of course this is a worse case scenario, but after the difficulties seen by conference hosts and digital media producers in the past couple of years, it's an easy assumption to make. How will their system take hundreds of t-shirt sales at a festival, or the transactions after a taco truck has sat outside a club for a night?

At the moment, only a select number of businesses in the US, Canada, Australia and Hong Kong will be able to try PayPal's new blue triangle. Next month, PayPal Here will roll out to all other merchants in those countries with more countries expected to be announced soon. 

Will this be the death knell for Square or can there still be multiple players in the space? We'll give it till the end of the year. If PayPal can maintain good customer relations and eliminate the pain points they already have with small merchants, more triangles than squares may be turning up at a farmers market near you.

Heather Taylor

Published 15 March, 2012 by Heather Taylor

Heather Taylor is the Editorial Director for Econsultancy US. You can follow her on Twitter, Google+ or Pinterest.

236 more posts from this author

Comments (4)

Sylvain Querné

Sylvain Querné, Head of Digital Marketing at Nokia

It will probably allow PayPal to finally move from its massive online position to the physical world... Smartphone NFC payment is getting closer by the minute.

over 4 years ago

David Edmundson-Bird

David Edmundson-Bird, Principal Lecturer in Digital Marketing & Course Leader MSc Digital Marketing Communications at MMU Business School

I think there will be room for more than one service. Visa and Mastercard (and a whole variety of other chargecard platforms) operate happily within a competitive space. PayPal suffers from being the Big Guy (look at some of their blunders) and aren't always widely liked. I think a series of national policies on anti-competition will force the existence of an alternative. Maybe Google will make it.

over 4 years ago

Michael Harris

Michael Harris, Freelance consultant at Private company

Short answer: No.

Firstly, Square doesn't carry the Paypal stigma. Too many people have been burned by the company for trivial matters to have confidence.

Second, Square has major points of difference. From loyalty integration through to a fully fledged POS solution, and a simplicity that Paypal can only dream of. Add in receipt delivery by multiple methods, and Square is streets ahead of where Paypal is and could ever be.

Thirdly, see point one.

If anything, this will encourage Square to get a wriggle on and expand beyond US borders.

over 4 years ago

Avatar-blank-50x50

AceFlex | Smart e-Business

We think that services like PayPal Here & Square will compete between each other for credit card transactions. But, the picture will be radically changed when innovative NFC payments via mobile devices get off the ground.

over 4 years ago

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