* Discover and PayPal sign up 50 merchant acquirers
* Burger King, Sephora, Brookstone, Nordstrom to accept
PayPal in stores
* Wal-Mart questions value of accepting PayPal in stores
By Alistair Barr
SAN FRANCISCO, April 30 PayPal hit a new
milestone on Tuesday in its quest to be accepted in millions of
physical stores, however, the payment division of eBay Inc
has yet to persuade Wal-Mart Stores Inc, the
world's largest retailer, to sign up.
Discover Financial Services, PayPal's offline
partner, has signed contracts with 50 merchant acquirers, which
will help extend PayPal's in-store payment service to more than
two million outlets in the United States by the end of 2013.
Total System Services Inc and Heartland Payment
Services Inc, two of the largest merchant acquirers,
signed up in recent weeks, joining other big players such as
Vantiv Inc, WorldPay, Global Payments Inc and
First American Payments, according to executives at Discover and
PayPal's expansion into physical stores gives the company
access to a market that is roughly ten times the size of the
online payments sector where it got its start over a decade ago.
Linking up with merchant acquirers is crucial to the PayPal
offline push because these companies are important cogs in the
payments ecosystem, signing up and underwriting merchants for
payment networks including Visa Inc, MasterCard Inc
"Partnering with merchant acquirers is the smart thing to
do," said Diane Offereins, president of payment services at
Discover. "They are basically the conduit between the merchants
and the consumer."
Recent merchant acquirer agreements mean merchants,
including fast-food giant Burger King, cosmetics retailer
Sephora and gadget seller Brookstone, will accept PayPal in
their stores by the end of this year.
Discover also works directly with about 1,500 of the largest
retailers in the United States and it has been negotiating with
them to accept PayPal in their stores.
Nordstrom Inc, a big department store operator,
recently signed up for PayPal in-store payments through a direct
relationship with Discover, according to Don Kingsborough, the
executive overseeing PayPal's offline expansion.
However, Wal-Mart has so far resisted attempts by Discover
and PayPal to get PayPal into its big-box stores.
"We do not see the value proposition for brick and mortar
merchants to accept PayPal in-store as it is an aggregation of
tender types already accepted in-store at a higher cost and
complexity to the merchant," Wal-Mart spokesman Randy Hargrove
wrote in a recent email to Reuters. He declined to comment
During a mobile payments conference panel in San Francisco
in November that included PayPal President David Marcus, a
Wal-Mart executive sounded hostile to accepting PayPal in
Gibu Thomas, a mobile executive from Wal-Mart's e-commerce
business, said the retailer had to be careful not to
inadvertently introduce another "middle man" into the payment
process. Wal-Mart's goal is to eliminate middle men, which helps
keep prices low, he added.
Discover's Offereins confirmed this week that Wal-Mart has
not agreed to accept PayPal in its stores yet.
Wal-Mart is working on a rival mobile payment technology
called Merchant Customer Exchange, or MCX, with other large
retailers including Gap Inc, Lowe's Cos Inc and