discover

PayPal Partners With Discover To Bring In-Store Payments Platform To 7M Merchants In 2013

Next Story

Typesafe Raises $14M From Shasta, Greylock, And Juniper To Commercialize Scala

PayPal has been steadily expanding its newly launched in-store payments platform to specific retailers, including Home Depot, Abercrombie & Fitch, JC Penney, Jamba Juice and a number of other retailers. But today, the payments giant is announcing a huge partnership which should help expand the presence of its payments platform in merchants and stores in a more meaningful way. PayPal is partnering with credit card company Discover to bring PayPal’s offline payments experience to more than 7 million merchant locations across the U.S., and potentially to millions of international merchant locations in the future.

Beginning in 2013, Discover will work with PayPal to enable merchants who accept Discover through the company’s terminals, to accept PayPal. The integration, were told by Don Kingsborough, PayPal’s Vice President of Retail, will be similar in functionality to the PayPal implementations in retail stores.

So for merchants, anyone who uses Discover’s network and accepts the credit cards, will be able to turn on PayPal’s in-store integration to offer consumers a way to pay with their PayPal account. To offer PayPal, merchants will not have to install or upgrade existing point­ of ­sale hardware or software and consumers will know of this additional payments option through in-­store signage.

Basically, customers can either use a PIN code via their mobile phones or a special PayPal credit card that can be swiped, in order to deduct the payment from their PayPal accounts. The solution is appealing to retailers, because it doesn’t require a significant investment in new technology, like replacing POS systems or installing some sort of NFC-based solution.

PayPal hasn’t yet released the pricing and rules for retailers, says Kingsborough. He tells us of the partnership, “This speeds up the ability to gain near ubiquity with merchants, so that consumers can use PayPal everywhere they shop.”

As part of the deal, Discover will be helping market the new integrations with specialized stickers and notifications for consumers in stores. Financial terms were not disclosed by either company. While Discover is one of the smaller credit card companies behind Visa, MasterCard and American Express, but PayPal says Discover is at about 95 percent of the US retail locations that Visa and MasterCard are accepted.

“We’re delighted to enable PayPal’s efforts to provide their U.S. customers acceptance at millions of physical point­of­sale locations by leveraging our unique payment services assets. The establishment of this relationship is a major industry milestone, which will help shape the emerging payments landscape by bringing together an established direct banking and payments company with a leading commerce enabler to create an alternative payments option for consumers at the point of sale,” said Diane Offereins, President of Discover Payment Services in a release. “This initiative will result in real change and innovation for the industry by bringing new technologies to the point of sale that benefit merchants and PayPal customers.”

And Kingsborough says that it’s unlikely that a similar deal will be struck with other credit card companies, including MasterCard or Visa. “We have a close relationship with Discover now, and we have solved the distribution problem in the U.S.,” he explains. He added, however, that there could be the possibility of partnering with another credit card company outside of the U.S.

Discover has been looking to expand its mobile wallet and in-store partnerships of late. Earlier this year, Discover announced a deal with BillToMobile to allow Discover’s e-commerce merchants carrier billing as an option. The credit card company just announced a partnership with Google, allowing Discover customers to save their cards to Google Wallet. Discover now uses Google’s Save to Wallet API to allow its cardmembers to save their credit card directly to their Wallet account from Discover’s online account center.

For wallets providers like PayPal, partnerships with credit cards can help with expansion, marketing, reach, branding and more. For PayPal, the potential expansion to 7 million merchants is a big win (although it’s unclear yet how many of Discover’s merchants will choose to accept PayPal). And PayPal is in early stage testing with McDonald’s for an in-store payments implementation.