| SAN FRANCISCO
SAN FRANCISCO Feb 21 PayPal launched a European
version of its PayPal Here mobile payments service for small
merchants on Thursday as the online payments division of eBay
Inc steps up competition with ivals, including Square
PayPal unveiled a new device, about the size of a
smartphone, that allows small merchants to accept credit and
debit cards under a more-stringent and complex system in Europe
known as Chip and PIN.
The gadget connects to a new PayPal app that merchants can
run on Apple Inc iPhones and Android-based smartphones.
PayPal said it will launch the service in the United Kingdom
this summer, but plans to release it in other European countries
PayPal is the largest online payments business, but it is
battling with a host of well-funded start-ups that are chipping
away at its dominance.
Square, headed by Twitter co-founder Jack Dorsey, attracted
thousands of small merchants in recent years by offering a free
card reader that attaches to smartphones and handles payments
for a flat 2.75 percent fee.
Last year, PayPal launched a rival service called PayPal
Here in the United States and several other countries, including
Japan and Australia.
The new European version of PayPal Here comes with a
different device designed from scratch by the company's U.K.
team because of the more complex Chip and PIN system in the
region. The approach in the United States, which relies on older
magnetic stripes on cards, is considered simpler but potentially
"Trying to figure out how to make Chip and PIN to work in
these devices has been hard," said Rick Oglesby, a payments
industry expert at Aite Group. "The gadgets so far have been
fairly expensive and big and clunky."
Square has yet to launch a service in Europe. It expanded
into Canada last year, but that market does not require smaller
merchants to use Chip and PIN technology yet, Oglesby noted.
PayPal said on Thursday that it will charge merchants for
the European PayPal Here device. It did not say what the price
will be, but a spokesman noted that it will be a "nominal" fee.
The company also plans to charge a per-fee transaction that
will be similar to the 2.75 percent it charges small merchants
in United States.
"For Chip and PIN devices, it's not realistic to bring the
cost down to zero," Oglesby said. "That tends to temper the
demand a little bit. But it also weeds out really small
merchants and individuals who won't use it as much."