PayPal is bringing its Square-like chip and PIN mobile payment service to the UK this summer, aimed at giving small businesses an alternative payment method to taking cash and cheques.
The system, known as PayPal Here, comes in two parts – a card-reader, which works alongside an iOS or Android smartphone running the PayPal Here mobile app – and enables traders credit and debit card payments without the need to use a separate chip and PIN machine from a bank.
PayPal said that the device will cost under £100, while the eBay-owned company will also take a fee of under 3% of each transaction made using the service. After launching Here in the US last year, PayPal is now trialling the system with a handful of businesses in the UK before a full launch in the summer.
Eden Zoller, an analyst with research firm Ovum, said the move was a logical one for PayPal as the UK is PayPal’s second biggest market outside of the US, with some 18 million active users. However, Zoller predicts that PayPal will face stiff competition from existing players and the potential arrival of Square in the UK.
“The market for these solutions is becoming increasingly competitive and PayPal Here is not the first of its kind in Europe, where the likes of iZettle, Payleven and mPowa have already launched,” Zoller said in a statement. “But PayPal has an advantage in being an established, trusted payment provider with a high profile global brand.”
Services like PayPal Here, iZettle et al are all hoping to corner the market in payments traditionally taken by small businesses in the form of cheque or cash. According to PayPal, 89 percent of UK adults carried at least one payment card and 66 percent of payments received by small businesses were still in the form of cheques or cash.
“Cash and cheques have served us well over the years but businesses that rely on them risk missing valuable sales,” said Cameron McLean, managing director of PayPal UK, in a statement.