An All-Handset Payments App Edges PayPal Closer to the Point of Sale

An application officially announced this week extends to virtually any cell phone the capability of accepting credit cards, a function that up to now mobile merchants have found mostly restricted to so-called smart phones like the iPhone or BlackBerry. The wCharge Credit Card Terminal, quietly introduced early this year by Transaction Wireless Inc., runs on most handsets and processes card transactions through Website Payments Pro, a service of PayPal Inc. The alliance with Transaction Wireless is the first of its kind for PayPal, and edges the processor, which has over its 10-year history confined itself to the e-commerce market, ever closer to the physical point of sale. A 3-year-old company based in San Diego, Transaction Wireless will not say how many merchants have signed up to use the app. Bruce Springer, president and chief executive, says they number in the thousands and include a wide array of small sellers ranging from tour companies to flea-market emporia to people selling jewelry and handbags. What they have in common is that they are now first-time credit card acceptors. “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.” While the app will allow merchants to use an existing merchant account, none of the sign-ups so far has had one or requested to use one, Springer adds. Website Payments Pro, which lets merchants piggyback on PayPal's merchant account, charges between 1.9% and 2.9% on each transaction, depending on volume, plus a fixed fee of 30 cents. With wCharge, merchants can use the phone they already have. AT&T Mobility and Verizon Wireless subscribers can download wCharge, while others can get it directly from Transaction Wireless. Merchants can also use a WAP version on the mobile Web. “We have a much more significant number on the [downloadable] version than on the WAP version,” says Springer. The two carriers charge a monthly subscription fee of $8.99, which they split with Transaction Wireless. The WAP version is $5 a month. Merchants can also avoid costs for other hardware, such as printers and card swipes. They could connect these devices via Bluetooth, but Springer says most opt not to, preferring to e-mail receipts or send them via text messaging. One key to holding down merchant costs, Springer says, is that the app is open to just about any mobile phone. Smart phones, which can run upwards of $200 or $300, depending on memory and other considerations, are a “barrier to entry” for small merchants, Springer notes. “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.” Most of the card-acceptance apps introduced so far have been written for phones like the various versions of BlackBerry and Apple Inc.'s iPhone. Intuit Inc.'s GoPayment application, launched this spring (Digital Transactions News, May 21) works on these smart phones and a limited selection of flip-phone models. A PayPal spokesman refuses to say how many Payments Pro merchants it expects will adopt the new app. Clearly, though, wCharge brings the San Jose, Calif.-based company a little further into the arena of physical-world transactions, a market many observers have expected it to enter. Last year, it began processing point-of-sale transactions for Moosejaw Mountaineering at the outdoor-gear retailer's seven stores (Digital Transactions News, May 1, 2008). Here, customers use their PayPal Mobile accounts to pay the merchant.