Like Square, the new service comes with a free card reader dongle. In this case, the card reader has been designed with a stabilizing “wing” that makes it much easier to swipe a credit card. PayPal notes that the reader comes with a free companion PayPal Here app that isn’t in the App Store as of the time of publication. The iPhone or iPad that is used with the card reader needn’t be online — apparently the card reader can be used offline as well.
The merchant simply needs to tap in an amount, then hand the phone or iPad to the customer. The buyer can add a tip, sign, and request a method of getting a receipt. If the merchant doesn’t have the card reader with him/her, the app has a Scan Card feature that uses the device’s camera to read the credit card number — the merchant still needs to enter the customer’s CVV and postal code. Scan Card also works with debit cards and checks, and the app can also be used to track cash transactions.
Both the card reader and app offer encryption, and PayPal will charge merchants a flat 2.7 percent fee for the service. If you apply the income towards your PayPal debit card, which offers a 1 percent rebate on all purchases, your effective rate is 1.7 percent. That’s a rate that Square can’t currently beat. PayPal is also touting immediate access to funds, while Square has a built-in one-day delay.
The service is being rolled out to a few thousand PayPal merchants in the U.S., Hong Kong, and Australia today, and should be available for everyone else in a few weeks. You can sign up to be notified of the availability of the app and readers on the PayPal website.