Digital Transactions Authoritative, insightful and timely information for payments professionals
PayPal Inc. and ShopKeep POS on Thursday turned up the temperature in what is becoming a hotly contested market for mobile acceptance with tablet computers.
n
Announcing details for its “Cash for Registers” program, which it introduced a month ago, PayPal said it will waive processing fees on volume up to $20,000 a month through Jan. 31. The program officially gets under way July 10, which means early-bird merchants could get more than six months’ worth of free processing. PayPal’s standard pricing for PayPal Here, its mobile-acceptance solution, is 2.7% for swiped credit and debit card transactions.
n
The San Jose, Calif.-based eBay Inc. unit, however, said only the first 10,000 merchants to apply will be eligible for the offer, which is intended to induce small brick-and-mortar merchants to replace their cash register with a version of PayPal Here for the iPad tablet from Apple Inc. The program also works with technology from partners ShopKeep POS and Vend, both of which offer tablet-based systems that perform non-payment functions on top of point-of-sale transaction processing.
n
By tying in tablet apps from ShopKeep and Vend, PayPal is adding to the pricing pressure. Its standard PayPal Here rate is 5 basis points lower than the pricing offered by industry benchmark Square Inc., which in just about three years has built a business processing more than $15 billion in mobile-acceptance volume annually, not counting processing the San Francisco company does for coffee chain Starbucks Corp. Square, too, has pushed beyond the market for mobile merchants with tablet-based products intended for small, fixed-store merchants.
n
On top of that, technology from ShopKeep adds an overlay of sales analytics, inventory management, and other non-payment functions. Before, ShopKeep couldn’t offer a rate to low-ticket merchants that was competitive with Square, says Jason Richelson, founder and chief executive of the New York City-based startup, because standard pricing from other merchant processors it works with always includes a fixed-fee component with a percentage rate. “Now we’re excited we can offer that lower rate, integrated into ShopKeep,” he tells Digital Transactions News.
n
In a press release issued on Thursday, ShopKeep takes dead aim at its West Coast rival, claiming the “Cash for Registers” program with PayPal will “hurt” Square, which it says offers “minimal inventory management and limited customer service.” A Square spokesperson refuses to comment on the statements.
n
Last August, however, Square introduced pricing that lets merchants process up to $21,000 a month at a flat $275 monthly price. That means Square merchants running anywhere from $10,185 to $21,000 a month in card volume would be able to beat ShopKeep’s 2.7% rate.
n
ShopKeep, though, is growing quickly. It now processes 1.1 million transactions a week for 6,500 merchants, according to Richelson, who will not release dollar-volume numbers. The 4-year-old company recently found it necessary to move into 15,000 square feet of new space, he says. More growth could come soon, as Richelson is negotiating deals with acquirers and independent sales organizations to bundle ShopKeep with their processing services.
n
Merchants that want to take advantage of the PayPal offer have until Sept. 30 to sign up (current PayPal Here, ShopKeep, and Vend merchant are also eligible). But to qualify they must spend at least $450 on so-called eligible hardware. This includes receipt printers, cash drawers, and iPad stands, but not the iPad itself.
