PayPal Collaborates With Discover, Enters Merchant Locations in US

A San Jose Calif.-based company, eBay Inc.’s PayPal offers users a safe, faster and easier way to make payments and get paid online. PayPal recently announced the extension of its services as the firm merges with Discover Financial Services that will bring PayPal to more than seven million merchant locations around the US.

PayPal currently has more than 50 million U.S. customers, and with this deal, the firm will increase recognition of its brand to “brick-and-mortar” stores all over the country.

Starting in 2013, this deal will let all customers of PayPal use their accounts at more than seven million merchant locations that already accept Discover.

The firm also plans to reach international market in future.

The partnership of PayPal with Discover will give the firm access to a wider network of merchants, which is the same number of U.S. merchants as Visa Inc. and MasterCard Inc.

Offering safe, speedy and simple payment process, this deal marks a step forward that the firm has taken to reach wider consumers.

As per payments analysts, PayPal can now target consumers where they shop the most.

Early trading in New York saw eBay increase 2.2 percent to $46.88 at 8:54 a.m., whereas Discover saw a rise of less than 1 percent to $37.19. EBay scaled up 51 percent this year through yesterday’s close, the fourth-best performance in the 71-company Standard & Poor’s 500 Information Technology Index. Discover has advanced 54 percent in 2012, which is the second-biggest gain among 81 firms in the S&P 500 Financials Index, after Regions Financial Corp.

This tie-up of Discover and PayPal is expected to get the former more transactions. Discover is currently the fourth-biggest in the U.S. following Visa, MasterCard and American Express Co.

“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 Payment Services, Discover.

Offerins further added, “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.”

Last month eBay revealed that 40 percent of firm’s 2Q revenue was generated from PayPal, which had 113.2 million active accounts as of June 30.

The world’s largest Internet marketplace also said that total value of processed transactions climbed 20 percent to $34.5 billion in the period from a year earlier.

This deal will also let PayPal customers use plastic payment cards or smartphones linked to their accounts to make purchases in stores.

“This really makes real all the technology and things that people have been working on and the changes in consumer behavior,” Don Kingsborough, vice president of retail services at PayPal, said in an interview. “This is the first time that you make it real for the consumer and for the retailers.”

Discover, led by Chairman and Chief Executive Officer David Nelms will charge PayPal for access to the network, said Kingsborough of PayPal. He however, did not disclose the terms or conditions.

PayPal and Discover had teamed up earlier on Money Messenger, which is a tool that allows customers to use a recipient’s email address or mobile phone number to send funds on the Internet or a smartphone.… Read the rest

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