PayPal Moves Into The Physical Realm With Mobile Credit Card Reader

PayPal is dangling its new dongle out there for small businesses who want to take mobile payments from customers’ credit cards. Its new “PayPal Here” gadget and PayPal app will join its fellow phone dongle, Square, in plugging in on iPhones and eventually, Android phones, so owners can accept payment wherever they happen to be selling stuff.

Reuters says the new triangular device is different from others like Square, however, or other gadgets where smartphones can be tapped on sensors to pay.

PayPal’s dongle (it’s a real word, we swear), will encrypt customer card information before its sent to the PayPal app on the mobile phone, to prevent customer data from being stolen or lost, claims the company.

Merchants who don’t want to use PayPal to link to a major bank account can sign up for a debit card and go to an ATM to withdraw cash for the sales they’ve made. Each sale will cost a merchant 2.7% of the purchase on all cards, compared to Square’s 2.75% charge.

PayPal takes on Square in mobile payments [Reuters]


Edit Your Comment

  1. Cat says:

    PayPal take failure on the road!

    This will not end well.

  2. FirePuff says:

    I still don’t trust those. Yes, they’re helpful as I never carry cash, but being attached to a personal phone, I have no idea if it’s a legit transaction or if they’re yoinking my card info.

    • kosmo @ The Soap Boxers says:

      It’s a 16 digit number, expiration date, 3 digit security code, and a name. That’s not a huge amount on information to memorize.

      With a little practice, someone could yoink your card info simply by having possession of it for a few seconds.

      • unpolloloco says:

        This. Also, liability’s limited to $50 legally and most card issuers say $0, so CC fraud really shouldn’t be a huge concern for the average consumer.

  3. NickJames says:

    No thanks, I’ll take my free squareUp account and dongle with direct to bank deposits any day.

  4. SPOON - now with Forkin attitude says:


    • Jawaka says:

      What a well thought and laid out argument.

      I can’t see how anyone would be able to argue your fine points.

      • minjche says:

        Your comment has absolutely zero substance and adds nothing to the conversation. You might as well have just said one word like “rubbish” or some synonym of that.

        (/sarcasm if that wasn’t obvious)

  5. Blueskylaw says:

    I can see the headlines now:

    PayPal screws customer with blue dongle. Customer not satisfied with experience.

  6. ZachPA says:

    Q: Is that a card skimming Android and/or iOS device attached to that legitimate PayPal Here device?

    A: No, that’s actually a legitimate Android and/or iOS device attached to that account freezing, card skimming, finger wagging, not-really-a-bank-but-plays-one-on-TV device.

    • kella says:

      The card reader encrypts the data before transferring it to the phone, and the encrypted data is sent to PayPal. Unlike the Square reader, the PayPal reader can’t be used as a skimming device. Even if the phone is hacked, the card data is not available to the phone, and it doesn’t have the crypt key.

  7. gman863 says:

    How long until PayPal catches and bans whores and drug dealers from accepting plastic?

    In three…two…one…

    • golddog says:

      Heh. More like how long before they accuse totally legitimate users of being whores and drug dealers, freeze their accounts, and brick their phones.

  8. dohtem says:

    Yeah right. They have screwed me over with eBay.

    I’ll stick with Square.

  9. whogots is "not computer knowledgeable" says:

    Why in the five screaming hells would anyone choose PayPal over Square? Brand recognition? To know Paypal is to hate it, so that reeeally shouldn’t help.

    • Rachacha says:

      The only reason that I could think would be a scenario like this. My wife used to run a small Internet craft business, and she used PayPal as her merchant account. Occasionally she would sell her products at local craft fairs, so having a PayPal credit card reader would have been extremely convenient. I suspect that there are several small business owners who are in a similar situation.

      • n0th1ng says:

        What advantage does Paypal have over anything else?

        • Rachacha says:

          At the time she set up her website it was easier than anything else and e-commerce was still relatively new, so a “trusted” brand like PayPal put buyers at ease that their CC information or other payment method would be safe.

          Today, almost every web hosting company offers an e-commerce tool so PayPal is not as important.

  10. j2.718ff says:

    “the new triangular device is different from others like Square”

    How so?

    • YouDidWhatNow? says:

      Duh. TRIANGLE. SQUARE. Hello?

    • Frankz says:

      Paypal’s triangle device encrypts the info, unlike Square’s square.
      That’s how it’s different, says so right there in the consumerist article.

      • j2.718ff says:

        It says that in a different paragraph. Thus, I couldn’t tell if encryption was a feature lacking in the Square (if so, damn! How’d they forget that?)

    • Libertas says:

      It says right in the article that it’s triangular, which is different than square.

  11. craftman says:

    Looks like Sabre’s attempt at the iPad with its ridiculous triangular form.

    Somebody at Paypal has been watching too much “The Office”.

  12. Frankz says:

    Square works with iPhones, iPads, iPods, and many Android phones. Their iPad app can work as a cash register and connect to a wireless cash drawer and/or receipt printer.
    Not to mention what others have already said, about the money going straight to your bank account, no risk of being frozen on a whim like Paypal does.

    Paypal’s will [unfortunately] get lots of use due simply to Paypal’s already widespread use, market penetration and market share.

  13. Telekinesis123 says:

    And hey guise, they’re still not a bank! Get just about all the benefits of being one, none of the regulation!

  14. microcars says:

    The only thing I like about this is the broad base of the card reader.
    My Square reader can take a few swipes to work because it is barely wide enough to hold the card “square” with the reader. Square used to have some sort of rectangular reader that was wider…but it wasn’t “Square” so I guess they ditched it.

    Other than that, I don’t see any reason to use this.
    My website still uses PayPal to process payments, but anything in person or over the phone is Square. PayPal used to charge me $30 a month for “Virtual Terminal”, when I dropped that and started using Square, I saved $360 a year instantly.

    I would not trust PayPal to hold these rates steady. They will keep their rates slightly lower than Square and if they can get Square to get lost, they will raise the rates.
    Remember when PayPal was giving away $5 when someone started a new account? It used to be $10! Then it was $0.
    I predict they will eventually start charging a monthly fee as well.

  15. gman863 says:

    Both Square and PayPal’s dongle could turn into a crack pipe attachment for people who want to take cash advances off their credit (not debit) cards.

    A typical credit card cash advance (for anyone stupid or desperate enough to do one) usually has an immediate processing fee of between 4% and 5%. The cash advance APR is often up to twice the interest rate for retail purchases, plus interest starts accumulating at day one.

    If someone plopped down the money for a card reader and set up an account with Square or PayPal, they could make a “purchase” using a credit card from bank “A” and have the money deposited the next day on either a PayPal debit card or directly in an account at another bank.

    * 2.75% (versus 4% – 5%) fee.

    * Much lower purchase interest rate.

    *If the card is paid in full at the end of each billing cycle, it amounts to an interest-free “float” on the money.

    Yes, I know this is illegal as hell under interbank merchant processing terms. The trick is proving someone didn’t “buy” something from their own company.

    • There's room to move as a fry cook says:

      You can do that now. Setup a webpage with a Buy Now button and pay with your Card A. No need for a dongle.

      • gman863 says:

        Setting up a webpage requires more effort than inserting a dongle.

        Think of it as Cash Advances For Dummies.

    • microcars says:

      How is it “interest free?”
      You charge $1000 on your card, you get $972.50 from Square.
      Then you pay off the $1000 when the bill comes due.

      Do this every month and you are paying APR 33% on that $1000

    • microcars says:

      How is it “interest free?”
      You charge $1000 on your card, you get $972.50 from Square.
      Then you pay off the $1000 when the bill comes due.

      Do this every month and you are paying APR 33% on that $1000

      • gman863 says:

        The difference is – while both methods require an up front service fee – you are not paying interest between the time you take the cash advance and paying it.

        Example: Cash advance of $1000; paid off in 30 days

        Bank “A” – $1000 + $40 (4% cash advance fee) + $20.00 (30 days interest @ 24% APR) = $60. Total fees/interest = $60

        Square: Cash advance of $1029 less 2.75% discount fee = $1000.70 net deposit. Zero interest charged. Total cost to customer is about $29; about 50% less than the cash advance.

  16. 180CS says:

    Took them enough time to try and vomit up a copy of Squares innovation. Why is this even an article? If this should be written about, then we should also be writing about every video-game clone/knockoff made as well.

  17. Weakly says:

    So I can give money to Wikileaks using my credit card? Oh right, it’s still PayPal.

  18. PhilipCohen says:

    And, just for a laugh, a critique of ‚ÄúThe New Way To Pay In-Store‚Äù via eBay’s clunky PreyPal, and other matters.

    eBay / PayPal / Donahoe: Dead Men Walking

  19. SmokeyBacon says:

    Wow based on my experiences with PayPal (which were not good), I am very concerned about this. Their security is crap, they linked to my account without my permission (well, I probably did give permission somehow without my knowledge and just didn’t know it at the time – and I am super obsessive about reading all that stuff to be sure things like this don’t happen), and I had someone hack my account with fake charges somehow. They did resolve it quickly so they get points for that, but I still have a hard time using them anymore because I just don’t trust them. And since they aren’t under bank regulations, what kind of recourse is there if there are any problems for either the purchaser or merchant using it?

    • menty666 says:

      And don’t forget that wacky habit of locking account holder’s money for 21 days just for kicks.

  20. Taylor Rolyat says:

    Heh…”dongle”……I’m sorry, what was the article about? PayPal or something?

  21. Jack T Ripper says:

    As one who uses Square all the time, I think this is a great idea. Square takes a pretty decent bite out of my charges and then I have to wait for it to transfer to my bank where I then transfer it to my paypal. Kind of a pain. I like using my Paypal debit card, but the funds have to be in your account in order to use them, so getting them there more directly like this is a great idea. However, the reason I like Square is because they can swipe or just enter in their card information. They don’t need a paypal account or anything, so hopefully this will be just as painless. If it saves me money then I’m all for it.

  22. cparkin says:

    I’ve been waiting patiently for Square to come to Canada and they haven’t. As much as I would prefer to not to use PayPal this is a pretty good solution for me.

  23. raytube says:

    Finally. A way to accept payments in my strip mall Ebay store. Can I interest you in a box full of analog cell phones? They are in perfect condition and work great! hit me up at !

  24. XTREME TOW says:

    This is going to be GREAT FUN at parties!
    Especially for all those stoopid enough to get drunk and let someone rifle through all their plastic.
    Spammers & Hackers, start your card readers!
    (I make all of my Dongles at home to save money. Yes, it really is a ‘real word’.)

  25. MikeVx says:

    I’ll trust Square, unencrypted from the dongle to the app, long before I’d even dream of risking anything that PayPal has their destructive digits in. I’ve bought things from people using Square readers, but if I see PayPal, no sale, and I’ll warn people to stay far away from those using them.