Paypal wants to replace credit cards in stores
For the first time, well, pretty much ever, the credit card oligopoly faces mounting competition from budding alternative payment options at retail stores, the latest of which comes from Paypal.
The leading provider of digital money transactions over the Internet has expressed an interest in bringing its dominance outside of the virtual world and into brick-and-mortar locations. According to the Wall Street Journal, it is in preliminary behind-the-scenes discussions to determine the viability of allowing consumers to link their Paypal account to their mobile phone and then swipe the phone at point-of-sale terminals. The money would come out directly from the consumer's Paypal account and there wouldn't be any plastic involved.
Paypal president Scott Thompson called the initiative a "top priority" in an interview with the Journal. "The tide is coming in and we will take advantage of that," he said.
Mobile phone manufacturers appear eager to get in on the world of point-of-sale transactions. The technology has already been put in place in other countries around the world, but here in the US if someone buys something at a store and doesn't pay with cash, either Visa, Mastercard, Discover, or American Express is getting a cut of the sale. Bringing in more competition at the checkout line could spur big consequences for everyone.
Paypal, owned by online auction powerhouse Ebay, does currently offer consumers a way to use their electronic funds in real-life stores, through the availability of a special Mastercard debit card. But now Paypal wants to cut out the middleman and power the POS sales itself.
With annual revenues of around $3 billion and moe than 220 million active users, Paypal could just be the one that turns the credit card industry on its head. More details are expected to be announced at Paypal's annual conference in October.