PayPal partners with wireless firm to create card processing tool

PayPal partners with wireless firm to create card processing tool

Small business owners, or those looking to get a small business up and running, have just been given an easy path to credit card processing, thanks to a first-of-its-kind partnership between San Diego-based Transaction Wireless and Internet payment giant PayPal. The agreement gives practically any cell phone -- not just "smart" cell phones such as Apple's iPhone or RIM's BlackBerry -- the ability to process and accept credit cards.

The partnership, announced in late August at DigitalTransactions.net, brings PayPal ever closer to physical point-of-sale territory.

Why is this important to retailers?

First, the ability to accept your customers' Visa, MasterCard, Discover and American Express cards beyond only a fixed terminal or over the Internet means your business can be anywhere your employees are. No longer will you need to write invoices for transactions written on the road. Your salesmen and women can simply take the credit card, and with their cell phone, complete the sale.

While the ability to process credit cards on the go is not new, it has previously been limited to users of high-end phones and devices. This alliance, says Bruce Springer (head of Transaction Wireless), as quoted in the DigitalTransactions.net article, will put an end to that gap between haves and have-nots.

"Most of the folks signing up don't offer credit cards because of the cost," says Springer. "Either they have a PayPal account already or they don't process [cards] at all." He adds that it made no sense from a business standpoint to limit the ability to only those with iPhones or BlackBerry devices. "We decided it made more sense to provide apps no matter what phone you're on," he says. "It's much simpler to just launch an iPhone version, but at the end of the day, it's not the best customer experience."

For those wondering about costs, Website Payments Pro, the company that allows merchants to piggyback their transactions on top of PayPal's merchant account, charges a fixed fee of 30 cents per transaction, plus a percentage that ranges between 1.9 and 2.9 percent, depending upon volume. This is in addition to a monthly fee of $8.99 that is split between PayPal and Transaction Wireless. For an additional $5.00 per month, merchants can use the WAP application for mobile Web access. The application also allows merchants to use existing merchant accounts, although Springer says that to date no one has requested to use one.

With all these fees, accepting credit cards via cell phone still offers merchants many ways to save not insignificantly on equipment costs. Once you've downloaded and installed the proper software and signed up for the appropriate accounts, you no longer need a credit card scanner or receipt printer. While Bluetooth models do exist, a more popular way to send receipts is via email or SMS. For a small or start-up business, these cost savings can mean the difference between breaking even or making a profit. Add to that the more satisfied customer base, and this new partnership could spell the beginning of the end of smart phone dominance in credit card processing.

Published: September 9,2023