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Square and PayPal lay the foundation for universal acceptance

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Square and PayPal lay the foundation for universal acceptance
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Being a retailer is not easy today. In addition to keeping up with merchandising trends, retaining employees, and battling price transparency and the debilitating effects of “showrooming”, you also must redouble efforts to retain and delight customers.

That challenge may sound like it should be resolved in the Marketing department, but a more integrated approach to building customer strategy would address not just what and when people buy, but how they prefer to pay.

Starbucks has set a brisk pace for the industry to follow, as it currently processes more than 1 million mobile payments per week with its own app tied to its loyalty program.

Now, they have announced that Square will begin processing all credit and debit card transactions at Starbucks stores in the US. While customers will be able to continue to use the app, a clear transition is on the way as Starbucks also announced its investment of $25 Million in Square.

After an initial sync between customer smartphone and POS terminal in Starbucks, GPS technology within the phone will advise Starbucks when a customer enters store in the future and populate the user’s name and photo to allow a secure transaction to complete.

In the same week, Square also announced a new pricing scheme which rewards merchants processing payments up to 250K per year a flat $275 per month with no additional fees or contract. One of the worst aspects of merchant acquiring for years has been muddy reporting to the merchant. Anything that simplifies the process and helps merchants understand the amount they pay for card processing will be well-received in the market.

In more payments news, EBay division PayPal announced plans to issue payment cards to its more than 50 Million active users in the US and that the cards will be accepted anywhere Discover is accepted, or about 7 Million retail locations nationwide. This news piggy-backs on the growing wave of national retailers already accepting PayPal for payment at the point-of-sale. The list is up to 15 today and includes Home Depot, Office Depot, Jos. A Banks and others. The card will act like a PIN based debit card.

To learn more about the invasion of PayPal into the traditional payment space, you can read the Discover press release and gain more insight from a Retail Wire discussion here.

A key question to ask yourself when thinking through the payments landscape is also a simple one – So What?

After all, cash and cards work well, so why rock the boat? Contactless payments never really took of and advancing the mobile payments cause is complicated, requiring the cooperation of many players, including retailers, credit card companies, banks, cellphone carriers and phone makers.

The answer comes in two words: acceptance network. The universal acceptance network is a hard won asset that “Big 4” card processors, Visa, MasterCard, American Express, Discover enjoy today. The two announcements from last week are clear indicators that both Square and PayPal are plugging in to acceptance networks that will make their forms of payment easy for consumers to engage with and use.


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