PayPal’s new payment device aimed at small business

Online payments provider PayPal is attempting to carve a slice of the mobile payments market, launching a mobile device that enables merchants to accept payments via their smartphones.

The device, called PayPal Here, comprises a mobile phone application and a thumb-sized triangular card reader that can be attached to the audio jack of a smartphone.

Merchants can accept credit card and PayPal payments by swiping the card through the card reader. It can also track cash transactions and allows merchants to directly invoice customers.

There are no set-up costs for PayPal Here. Instead, payments accepted with PayPal will be charged a fee per transaction.

Sellers do not need to open a new bank account in order to use the device. All they need is a premier or business PayPal account, which can be linked to their existing bank account.

Payments are deposited immediately into the seller’s PayPal account.

The new device puts PayPal in competition with Square, a mobile payment start-up founded by former Twitter chief Jack Dorse and backed by Sir Richard Branson.

PayPal launched the device today in Australia, Hong Kong, the United States and Canada, with rollouts expected to follow in the Asia-Pacific and Europe.

The device is compatible with Apple iPhones and will soon be available for use on all Android devices as well.

According to Brad Paterson, PayPal’s head of new ventures in the Asia-Pacific, the device is specifically intended for small businesses, especially those with employees “on the road”.

Paterson says the device will prove particularly popular for plumbers, electricians, masseuses, salespeople or operators of market stalls.

“A lot of [small businesses] are becoming very mobile. Cash use is in decline. People are looking to use new forms of payment, and more than 50% of small businesses are now using a smartphone,” he says.

“If a consumer wants to pay with a credit card, that merchant will now be able to accept that credit card and not have to turn that customer away if they don’t have enough cash.”

According to Paterson, businesses will be able to personalise their internal inventory, and provide company-branded and itemised invoices to customers via email or SMS.

With the launch of PayPal Here, PayPal is also updating its consumer mobile application to enable a check-in feature.

This means that when customers check in to any store accepting PayPal Here, the merchant is instantly notified.

The smartphone swipe device will be free for any business owner who registers their interest via the PayPal Here microsite in the first six months from launch.