PayPal launches new technology for small businesses to accept payments through smartphones

PayPal has released a new mobile payments technology that will allow small businesses to process credit and debit card payments through smartphones, in a direct move against its main American competitor, Square.

The move comes as the mobile payments scene continues to heat up, with competitors such as Google introducing more ways for users to process payments through smartphones.

PayPal’s latest move, called “PayPal Here”, provides a gadget that plugs into a smartphone’s audio jack that allows users to then swipe credit cards and then process the payments through a specific app.

Unlike Square, which only operates in North America, PayPal says the gadget will be available from today and Australian users can take part.

“This is just an extension of what we’ve been doing. We’re taking the same functionality of PayPal and then allowing everyone to turn their phone into a card reader,” PayPal spokesman Brad Paterson says.

The Square app in the United States has been extremely popular among small and micro businesses, particularly with individuals who don’t necessarily have access to complicated or extensive cash transfer technology.

Spokesman Brad Paterson says the concept is the same here, and that anyone – even someone not involved in a business – can accept payments.

“If you’re selling goods or services, you can use this. You’re out on the go or in a fixed location and need to accept payments, then you can use this.”

“The vast majority of businesses in Australia are small businesses, and many are micro businesses. This fits in really well with what they’re trying to do.”

The device is free for the next six months, but after that Paterson says users will be charged – that amount isn’t yet known. Transactions will cost 2.4% + 30 cents.

The comparisons to Square, founded by former Twitter chief executive Jack Dorsey, are hard to deny. Both devices operate through the headphone jack of an iPhone, both swipe credit cards, have a specific app, and are designed for small business – the PayPal device is even shaped like a triangle.

Paterson says there are definitely parallels and there was competition, but that PayPal is also trying to differentiate as much as it can.

“We accept all forms of cards, and PayPal payments as well. We’ve also got a new consumer PayPal app, where users can check in to their local store. The merchant or small business can log them in, and with one or two clicks charge that customer into their account.”

Paterson also says the high level of security is a key differential between itself and Square – however, PayPal’s gadget will remain the only one on the market in Australia.

“This is all about choice,” he says. “We need to be mobile, we need to innovate with what our customers are telling us. They want to have the power to pay wherever they are.”