* PayPal signs pact with VeriFone to smooth adoption in
* Some Google Wallet partners sign with PayPal
By Alistair Barr
SAN FRANCISCO, May 24 PayPal has made deals with
15 retailers including Toys R Us, J C Penney and Barnes
& Noble that will allow consumers to pay for purchases
with their cellphones while expanding the online payment
company's service into additional physical stores.
Earlier this year Home Depot began accepting PayPal
in about 2,000 stores.
For retailers, the service may attract more shoppers,
provide more information about consumers, and help reduce costs
associated with credit card payments.
For PayPal, owned by eBay Inc, physical stores can
provide growth beyond its online roots.
EBay Chief Executive John Donahoe and Chief Financial
Officer Bob Swan told Wall Street earlier this year that PayPal
planned to sign up about 20 big retailers in 2012.
"They said 20 large merchants would partner with us this
year. This is only our first installment. There will be others,"
Don Kingsborough, the PayPal executive overseeing the offline
initiative, said from its headquarters in San Jose, California.
PayPal grew quickly by making it easy for people to make
secure online payments. It grew to prominence on eBay's online
marketplace, leading eBay to acquire the business in 2002. It
has since branched out to hundreds of other e-commerce websites
and is working on expanding to mobile transactions as well as
Other retailers announced on Thursday that have signed on
for PayPal's in-store service are Office Depot, American
Eagle Outfitters, Abercrombie & Fitch, Rooms To
Go, Jos. A. Bank, Aeropostale, Foot Locker
, Nine West, Jamba Juice, Guitar Center,
TigerDirect and Advance Auto Parts.
Jamba, American Eagle and Toys R Us were notable additions
because they also use Google Wallet, a PayPal rival run by
Some of these retailers will go live with PayPal in-store
payments next month, Kingsborough said, while not mentioning
EBay shares closed down 3 cents at $39.67 on Thursday.
Shawn Milne, an analyst at Janney Capital Markets, said
PayPal had yet to strike a deal with a huge retailer, or
"whale," such as Target Corp.
He said, however, that the breadth of retail categories
represented by the merchants announced on Thursday would likely
help PayPal encourage more consumers to use its service in
David Marcus, PayPal's new president, said it takes time to
bring large merchants into such a new initiative.
"We're not even at halfway through the year, and we already
have 16 large retailers," he said, adding that PayPal expects to
comfortably reach its goal of 20 big merchants in 2012.
Marcus said PayPal may process more than $7 billion worth of
mobile payments this year.
He also said that more than 300,000 small businesses had
registered for PayPal Here, the company's card payment service
that works with smart phones and competes with start-up Square
Inc. PayPal Here was launched in March.
Earlier on Thursday, PayPal said it had signed agreements
with VeriFone Systems and Equinox Payments to get its
payment technology on their networks of checkout terminals.
VeriFone and Equinox provide payment terminals that are used
in stores run by many of the world's largest retailers. Earlier
this year, PayPal signed a similar deal with the other leading
payment terminal provider, Ingenico.
These agreements should help PayPal's offline expansion,
giving it potential access to almost 40 million payment
terminals that are already installed in stores worldwide.
PayPal's service was quickly rolled out in Home Depot stores
this year, partly because no new hardware needed to be bought or
installed by the retailer. Instead, just software on payment
terminals needed to be upgraded.
"An important part of our future is to get to ubiquity,"
Kingsborough said on Thursday. "There will be 40 million
terminals eventually to let consumers buy in stores with PayPal.
That's one of the big building blocks we have to get to
VeriFone is used by 80 percent of the top 200 U.S. retailers
while Equinox is used by three of the top 10, according to Doug
Anmuth, an analyst at J.P. Morgan.
"This ubiquity makes it significantly easier for PayPal to
quickly increase adoption among large retailers," Anmuth said in
a note to investors. "The ability to quickly upgrade software on
point-of-sale terminals removes a great deal of friction around
the willingness of offline merchants to adopt PayPal."