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Table of Contents

Lead Story

Equipment leasing has its place


Industry Update

PayPal's Discover deal makes room for acquirers

Square reaching beyond micro-merchants with flat rate

MCX - it's about more than the wallet


Research Rundown

A new strategy for health-care payments

Selling Prepaid

Prepaid in brief

Campus card fees – fair or foul?

International provider with local focus


Opening gateways to AVS

Chandan Mukherjee
PayCube Inc.


Street SmartsSM:
Perry Mason and the post mortem

Jeff Fortney
Clearent LLC

How to help merchants counter fraudulent orders

Bill Hoidas
Matrix Payment Systems

Tips for managing remote sales teams

Alan Kleinman
Meritus Payment Solutions

The smart way to sell POS systems - Part 1

Joe Porco

Ignite revenue with a sales incentive program

Peggy Bekavac Olson
Strategic Marketing

Company Profile

My Clear Reports

New Products

Online loyalty builder for merchants

Simpli Marketing
Tecmark Inc.

POS software delivers optimum control

Syspro Point of Sale


Oasis in the workplace


2012 events Calendar


Resource Guide


A Bigger Thing

The Green Sheet Online Edition

September 10, 2012  •  Issue 12:09:01

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PayPal's Discover deal makes room for acquirers

PayPal Inc. will be issuing cards and working with acquirers as it moves toward its goal of ubiquity in the payments marketplace, Don Kingsborough, PayPal Vice President of Retail and Prepaid Products, said in an investor conference call about PayPal's new alliance with Discover Financial Services. PayPal's digital wallet is expected to be available at more than 7 million U.S. merchant locations that accept Discover cards by the second quarter of 2013.

Diane Offereins, President of Discover Payment Services, called the PayPal deal "a major industry milestone" that will "help shape the emerging payments landscape by bringing together an established direct banking and payments company with a leading commerce enabler to create an alternative payments option for consumers at the point of sale. This initiative will result in real change and innovation for the industry by bringing new technologies to the point of sale that benefit merchants and PayPal customers."

Kingsborough added that the partnership will create new benefits for Discover merchants without requiring them to install new hardware or software. "This relationship will deliver a truly seamless digital wallet, available most places consumers shop offline, which offers the speed, simplicity and security already enjoyed by 113 million active PayPal customers online," he said.

According to Kingsborough, PayPal/Discover transactions will not be considered debit payments, nor will merchants be required to have a PIN pad for swiped transactions. Regarding PayPal's pricing, Kingsborough said PayPal has been "in conversation with the Fed about debit interchange."

Mobile strategy

A leader in the mobile wallet arena, Discover is participating in the Isis wallet initiative, as well as in Google Inc.'s mobile wallet venture, which the search engine just transitioned to a cloud-based payment solution.

Offereins said Discover intends to shape the commerce landscape through partnerships. "We are focused on enabling solutions and partnerships spanning a spectrum of emerging payments, including mobile, chip, alternative and prepaid, and have gained significant momentum with this approach," she said. "We're focused on leveraging our network to support nontraditional payments," she said. "As commerce evolves, creating new channels and environments, our network also needs to adapt."

Call to acquirers

PayPal has partnerships with 16 national retailers, including its recent teaming with Starbucks Corp. In less than a year, the company has attached itself to the POS at more than 3,000 U.S. retailers, launched a successful mobile POS system for small businesses called PayPal Here and entered deals to integrate PayPal with the POS equipment of the major U.S. terminal manufacturers.

During the investor conference call about the Discover deal, Kingsborough said that in addition to the 7 million merchant locations Discover brings to PayPal, the card company also provides access to its relationships with 135 acquirers.

"Discover acts as an acquirer for 1,500 large merchants," Kingsborough stated. "We plan to roll out at these merchants early and the balance in the coming months after that. These [Discover] merchants are already embedded with technology in existence, or will be by the beginning of the year."

To enroll all Discover merchants by the second quarter of 2013, PayPal is going to need help from acquirers. The company will work with acquirers to continue building online and offline networks, and acquirers will be compensated because they have a role in the value chain, Kingsborough noted. "You do have to get acquirers to cooperate with you," he said. "We are on a path and will continue to be on a path of getting full cooperation for all the acquirers." He added that the company will maintain the same 2.75 percent processing fees it has advertised.

Issuing cards

Kingsborough said PayPal intends to extend its online payment program to offline retailers using mobile as the "connecting tissue"; he sees card issuing as a "default" that will become less important as the company evolves.

"To integrate into the life of the consumer you have to be wherever consumers want to shop," he said. "That's what accelerates adoption. Issuing cards enables the integration into the consumer's life, and that enables new technologies into their life." The card is "an extension of the existing network into the physical world," he said. "This is not a transaction like any card transaction you've ever had." The card acts as a token used in the payment mix PayPal has built in the cloud, he added.

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